Werner Enterprises Inc.WERN

Morningstar Rating

Stock Research and Analysis

by Anthony Dayrit

Generating robust double-digit growth for most of the last decade, Werner Enterprises has become one of the five largest truckload carriers in the United States. However, bigger isn't always better, and the company earns mediocre profit margins because Read more

Bulls Say

Werner maintains a relatively diverse client base, and no customer accounts for more than 10% of overall revenue. The firm generates more than half of its revenue from its top 25 customers.

The company's 1,000-plus temperature-controlled trailers may be able to partly offset industrywide soft demand. Demand for perishable items is typically more immune to slowdowns in the general economy than dry-van goods like durables and discretionary consumer goods.

Werner's ability to offer a variety of truckload services may help create stickier customers in a fragmented industry. The company assigns 40% of its trucks to dedicated fleets, which typically contain longer customer contracts than nondedicated services. Read more

Bears Say

The jury is still out as to whether Werner can successfully run its logistics business in the Chinese market.

Werner's operating metrics don't set the firm apart from competitors in a hotly contested industry--the company's profit margins and operating ratio hover around the middle of the pack.

Despite solid top-line growth, Werner hasn't been able to improve its returns on invested capital, which rarely exceed its cost of capital. Read more

Strategy

Werner aims to provide a full palette of services within its truckload trucking segment, focusing on transporting consumer nondurable products that are less exposed to cyclical demand. The company has Read more

Management

Similar to a number of our other trucking freight carriers (Knight, Heartland, and Marten Transport MRTN), Werner is a family-run business. Werner family members sit at three of the eight seats on the board--founder and former CEO Clarence Werner occupies Read more

Profile

Werner Enterprises is one of the top five domestic truckload carriers, with annual revenue of around $2 billion. It derives about 86% of its revenue from its wide array Read more

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