Shares of trucking company Covenant Transportation Group, Inc. (NASDAQ: CVTI) jumped as much as 15.5% in trading Friday after reporting first quarter earnings. At 3:25 p.m. EDT shares were still up 13.1% on the day.
First-quarter revenue rose 1.5% to $158.7 million, although it was down 3.1% to $140.1 million when fuel surcharges are taken out. On the bottom line, net income fell from $4.4 million a year ago to $0.5 million, or $0.03 per share, but still came in a penny ahead of expectations.
Image source: Getty Images.
Trends in the company's asset-based operations were fairly strong with revenue up $2.9 million to $145.6 million and average freight revenue per tractor per week up from $3,721 a year ago to $3,755.
Investors are reading a lot into a very small earnings beat this quarter, but they must like the earnings trends. For the full year, analysts are expecting earnings of $0.92 per share, meaning shares trade at about 21 times forward-earnings estimates. That's a steep price given the decline in revenue without the fuel surcharge and I'm not very bullish on a small earnings beat. But investors should watch the company's trends throughout 2017 to see if higher expectations are going to be met or if the stock has gotten ahead of itself in trading.
10 stocks we like better than Covenant Transportation Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Covenant Transportation Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of April 3, 2017
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.