Heartland Express Inc.HTLD

Morningstar Rating

Stock Research and Analysis

by Anthony Dayrit

Heartland Express is one of the top truckload carriers that we cover, boasting some of the highest operating margins and returns on invested capital in the industry. The company's acute attention to expense control has resulted in an average operating Read more

Bulls Say

Heartland generates some of the best operating margins in the trucking industry, and its mid-30s returns on invested capital are even more impressive given the asset-intensive nature of the trucking business.

Heartland maintains a high trailer/tractor ratio (generally 2 to 1), which allows it to position trailers at customer locations and provide on-demand delivery.

In 2007, management issued a special dividend to shareholders of almost $200 million rather than hoarding cash on its balance sheet. Read more

Bears Say

Heartland's customer base is concentrated, with its 10 largest customers accounting for 51% of overall sales. One client constitutes 12% of revenue. Loss of a key client would put a large dent in the company's wallet.

The highly fragmented nature of the trucking industry makes for a difficult pricing environment, especially during times of low shipping demand. Competitors looking to salvage asset utilization may drop prices, causing significant pressure on margins.

Although increases in diesel prices are mostly passed through to customers via fuel surcharges, margins are likely to be weighed down during price increases because truckers cannot recover the cost of fuel consumed when idling or driving out of route miles. Read more

Strategy

Heartland has achieved the majority of its growth internally, although it has made five small acquisitions (most recently in 2002) and keeps its ears perked up for good deals during business downturns. Read more

Management

Management's focus on minimizing costs has generated robust returns on invested capital. We find the CEO's compensation policy particularly impressive. At his request, since 1986, founder, CEO, and chairman Russell Gerdin has been paid total annual Read more

Profile

Heartland Express is an asset-based truckload carrier specializing in short- and medium-length lane hauling. The company operates out of its Iowa headquarters and 10 regional Read more

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