Schneider National SNDR is facing freight market challenges affecting its truckload volumes. Escalating operating expenses are adversely impacting the company’s bottom line, making it an unattractive choice for investors’ portfolios.

Let’s delve deeper.

SNDR: Key Risks to Watch

Southward Earnings Estimate Revision:The Zacks Consensus Estimate for fourth-quarter earnings has moved 26.7% south in the past 60 days. For 2024 and 2025, the consensus mark for earnings has been revised 13% and 15% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.

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Dull Earnings Surprise History: SNDR has a discouraging earnings surprise history, having missed the Zacks Consensus Estimate in three of the trailing four quarters and surpassed once. The average miss is 11.07%.

Weak Zacks Rank: SNDR currently carries a Zacks Rank #4 (Sell).

Bearish Industry Rank: The industry to which SNDR belongs currently has a Zacks Industry Rank of 170 (out of 250). Such an unfavorable rank places it in the bottom 32% of Zacks industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.

A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.

Headwinds: SNDR continues to face challenges from market volatility and rising costs, which could impact growth and earnings in the near term.

Market conditions were worse than expected in the third quarter of 2024, significantly affecting SNDR’s performance, leading to lower truckload volumes. While the company anticipates stabilization in the fourth quarter, there is a risk that the recovery could be slower than planned, which would continue to affect truckload volumes.

In the third quarter of 2024, the truckload segment faced lower network volumes, offset by growth in the dedicated sector.The dedicated average truck count increased 4% due to new business growth, while the Network average truck count was down 12%. This suggests that the truckload network may still be struggling, and if volumes don't recover, it could negatively impact SNDR’s bottom line.

Labor costs, comprising salaries, wages and benefits, and accounting for 27% of the total operating costs, increased 2% year over year to $347.8 million.

Stocks to Consider

Investors interested in the Zacks Transportation sector may consider Westinghouse Air Brake Technologies WAB and SkyWest SKYW.