Universal Logistics’s (NASDAQ:ULH) Q4 Sales Beat Estimates
Transportation and logistics solutions provider Universal Logistics (NASDAQ:ULH) reported Q4 CY2024 results exceeding the market’s revenue expectations , with sales up 19% year on year to $465.1 million. Its GAAP profit of $0.77 per share was 17.2% below analysts’ consensus estimates.
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Universal Logistics (ULH) Q4 CY2024 Highlights:
"Universal notched another solid performance during the fourth quarter, making the full-year 2024 our second best financial performance in company history," stated Tim Phillips, Universal's CEO.
Company Overview
Founded in 1932, Universal Logistics (NASDAQ:ULH) is a provider of customized transportation and logistics solutions operating throughout the United States and in Mexico, Canada, and Colombia.
Ground Transportation
The growth of e-commerce and global trade continues to drive demand for shipping services, especially last-mile delivery, presenting opportunities for ground transportation companies. The industry continues to invest in data, analytics, and autonomous fleets to optimize efficiency and find the most cost-effective routes. Despite the essential services this industry provides, ground transportation companies are still at the whim of economic cycles. Consumer spending, for example, can greatly impact the demand for these companies’ offerings while fuel costs can influence profit margins.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Universal Logistics’s 4.1% annualized revenue growth over the last five years was sluggish. This was below our standard for the industrials sector and is a tough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Universal Logistics’s history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 4.3% annually. Universal Logistics isn’t alone in its struggles as the Ground Transportation industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.
This quarter, Universal Logistics reported year-on-year revenue growth of 19%, and its $465.1 million of revenue exceeded Wall Street’s estimates by 8.9%.
Looking ahead, sell-side analysts expect revenue to decline by 1.4% over the next 12 months. Although this projection is better than its two-year trend, it's tough to feel optimistic about a company facing demand difficulties.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Universal Logistics has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 9.3%, higher than the broader industrials sector.
Analyzing the trend in its profitability, Universal Logistics’s operating margin rose by 6.4 percentage points over the last five years, showing its efficiency has meaningfully improved.
In Q4, Universal Logistics generated an operating profit margin of 8.2%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Universal Logistics’s EPS grew at an astounding 30% compounded annual growth rate over the last five years, higher than its 4.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into Universal Logistics’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Universal Logistics’s operating margin was flat this quarter but expanded by 6.4 percentage points over the last five years. On top of that, its share count shrank by 3.4%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Universal Logistics, its two-year annual EPS declines of 11.9% mark a reversal from its (seemingly) healthy five-year trend. We hope Universal Logistics can return to earnings growth in the future.
In Q4, Universal Logistics reported EPS at $0.77, down from $0.81 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Universal Logistics’s full-year EPS of $4.94 to shrink by 6.3%.
Key Takeaways from Universal Logistics’s Q4 Results
We were impressed by how significantly Universal Logistics blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its EPS missed. Overall, we think this was a mixed quarter. The stock remained flat at $42.95 immediately after reporting.
Is Universal Logistics an attractive investment opportunity at the current price? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free .