ArcBest Corp

Old Dominion Freight Line announced Monday a 4.9% general rate increase to various tariff codes effective Oct. 5, one month earlier than last year's hike, which was itself moved up by a month. The percentage represents an expected average of adjustments to base rates across different lanes and weight classes, used to offset cost inflation and fund capex projects; last year's GRI was also expected to average 4.9%. Greg Lawrence, vice president of pricing services, said the increase is designed to help offset continued cost pressures related to real estate, equipment, technology, and competitive wages and benefits. Other public carriers have also pulled GRIs ahead of the traditional one-year schedule: ArcBest implemented a 5.9% hike for LTL services at both business units on June 22, roughly six weeks ahead of the one-year anniversary of last year's increase, while Saia implemented a 7.1% general rate increase on July 6, 120 basis points higher and 3 months earlier than last year. The increases come as the Institute for Supply Management's Manufacturing PMI remained in expansion territory for an eighth consecutive month in August at 54.6, just 100 bps below a four-year high set in July, with the new orders subindex at 53.7.

ArcBest raised its third-quarter guidance for its asset-light segment and reiterated its asset-based margin outlook after reporting accelerating August tonnage growth. The asset-based unit, which includes ABF Freight, saw revenue per day rise 9% year over year in August, up from 7.7% in July, driven by a 9% increase in tonnage with no change in yield. Excluding fuel, yield declined by a low-single-digit percentage, as heavier shipment weights, up 14% year over year, pressured yields but typically aid margins. The asset-light segment, including truck brokerage, now expects adjusted operating income of $10 million to $12 million for the third quarter, up from its initial $6 million to $8 million guidance, citing yield discipline and productivity gains. ArcBest's mid-quarter update offers insight into the less-than-truckload market, where public data is scarce.

ArcBest Corporation reported second-quarter 2026 non-GAAP earnings per share of $2.38, compared to $1.36 in the prior-year period, driven by stronger pricing and growth in managed solutions. Revenue rose 16% year over year to $1.2 billion, while the company announced a restructuring plan targeting $40 million in annualized cost savings through brand consolidation and facility closures. Asset-Based revenue reached $783.7 million, up 9.9% on a daily basis, with an adjusted operating ratio of 90.8%, a 200-basis-point improvement. Asset-Light revenue was $438.7 million, up 28.3% on a daily basis, led by a 14.6% increase in shipments per day and record managed solutions volumes. GAAP results included a net loss of $13.8 million, reflecting $85.3 million in pre-tax noncash impairment and restructuring charges, primarily from the write-off of the Panther trade name and U-Pack equipment. The company expects third-quarter Asset-Based adjusted operating ratio to be generally in line with the second quarter, while Asset-Light non-GAAP operating income is projected at $6 million to $8 million.

ArcBest has earned a Zacks Rank #1 (Strong Buy) after analysts significantly raised earnings estimates for the freight transportation and logistics company. The Zacks Consensus Estimate for the current quarter rose 8.96% over the last 30 days to $2.18 per share, a 60.3% increase from the year-ago period. For the full year, the consensus estimate climbed 8.68% to $6.38 per share, representing a 72.4% year-over-year jump. The stock has already gained 9.1% over the past four weeks, and the improving earnings outlook suggests further upside may remain.

Truckload and less-than-truckload rate indexes are expected to reach new highs in the third quarter as the freight industry recovers from a nearly four-year downturn. The TD Cowen-AFS Freight Index shows the truckload rate-per-mile component hit a 14-quarter high in the second quarter, 16% above the January 2018 baseline, and is forecast to rise to 17.7% above the baseline in the third quarter. The less-than-truckload rate-per-pound component reached an all-time high in the second quarter, 76.5% above the 2018 baseline, and is projected to increase 30 basis points sequentially in the third quarter. Capacity constraints, higher diesel fuel prices, and accelerated general rate increases by carriers such as ArcBest and Saia are driving the increases. The report also notes that more than 48,000 non-compliant drivers have left the industry over the past year, further tightening supply.

Zacks Investment Research highlights J.B. Hunt Transport Services, Knight-Swift Transportation Holdings, and ArcBest Corporation as top picks in the improving freight market. The Zacks Transportation-Truck industry has surged roughly 51% over the past year, outperforming the S&P 500's 23.7% gain, and carries a Zacks Industry Rank of 41, placing it in the top 17% of all industries. Knight-Swift and ArcBest both hold a Zacks Rank #1, with upward earnings estimate revisions of 2.1% and 11% respectively over the past 60 days, while J.B. Hunt carries a Zacks Rank #2 and has beaten estimates in three of the last four quarters. The improving freight scenario is supported by the Cass Freight Shipments Index rising 3% month-on-month in May 2026, marking four consecutive monthly gains, alongside capacity tightening and rising rates.

Manufacturing activity expanded for a sixth consecutive month in June, with the ISM Manufacturing PMI registering 53.3, 70 basis points below expectations and the May result but still the second-highest reading this year. The new orders subindex, a forward-looking indicator, came in at 56, down 80 basis points from May, with four of the six largest industries reporting order growth. The data is supportive of less-than-truckload demand, as roughly two-thirds of LTL carrier revenue is tied to the industrial sector, and public LTL carriers have reported improving freight demand with two-year-stacked tonnage comparisons turning positive in May. Supplier deliveries slowed for a seventh straight month at 57.4, while customers' inventories remained too low at 42.3, suggesting future production increases. Shares of LTL carriers rose 1% to 2% in midday trading Wednesday.

ArcBest is benefiting from a more constructive freight market as truckload capacity tightens and manufacturing indicators expand. The company's first-quarter 2026 contract renewals and deferred pricing agreements averaged a 6.3% increase, while asset-based shipments per day rose 1.8% and tonnage per day increased 6.5%. Technology-driven productivity is central to margin improvement, with AI-enabled city route optimization delivering $15 million in annualized savings and continuous improvement training generating $32 million in annualized cost savings across roughly 75% of its network. ArcBest's integrated model, combining ABF Freight's asset-based less-than-truckload network with asset-light logistics, sees about 70% of asset-light customers also using asset-based services, and cross-sold accounts generate more than three times the revenue and profit per account. However, the asset-based operating ratio worsened to 97.3% from 95.9% a year earlier due to higher labor, fuel, and equipment depreciation costs, while billed revenue per hundredweight fell 3.9% as the freight profile shifted toward heavier shipments. The Zacks Consensus Estimate implies year-over-year sales improvement of 15.3%, 13.3%, and 11.4% for the June quarter, September quarter, and current year, respectively, with upward EPS revisions over the past 60 days.

ArcBest's fair value estimate has been raised to US$157.73 from US$97.42, driven by higher revenue growth and profit margin assumptions. Goldman Sachs lifted its price target to US$165 from US$117, citing a more constructive freight recovery outlook, while Wells Fargo raised its target to US$150 from US$130 and BofA increased its target to US$160 from US$138. JPMorgan also raised its target to US$147 from US$117 but maintained a Neutral rating, seeing a balanced risk-reward profile. The revised fair value reflects a revenue growth assumption of 8.81%, up from 5.35%, and a profit margin forecast of 5.64%, up from 3.56%.

ArcBest Corporation was added to several Russell growth and small-cap benchmarks in late June 2026, including the Russell 2000 Growth, Russell 2500 Growth, Russell 3000 Growth, Russell 3000E Growth, Russell 2000 Growth-Defensive Index, and the Russell Small Cap Comp Growth Benchmark. The broad inclusion reinforces ArcBest's profile as a growth-oriented logistics company and may attract more index-tracking and quantitatively driven institutional investors. However, the company faces near-term challenges, having posted a net loss of about US$1.0 million on revenue of US$998.8 million in the first quarter of 2026. Analysts project revenue of about US$5.3 billion and earnings of US$309 million in the future, but warn that underinvestment in automation could pose risks amid increasing freight tech competition.

ArcBest currently holds a Zacks Rank of #1 (Strong Buy) and a Value grade of B, making it the superior value opportunity over JB Hunt, which carries a Zacks Rank of #2 (Buy) and a Value grade of D. ArcBest trades at a forward P/E of 24.72, a PEG ratio of 0.66, and a P/B of 2.51, while JB Hunt has a forward P/E of 37.03, a PEG ratio of 2.00, and a P/B of 7.06. The stronger earnings outlook and more attractive valuation metrics support ArcBest as the better choice for value investors.

Goldman Sachs has broadly raised earnings estimates and price targets for less-than-truckload and truckload transportation companies, citing improving freight fundamentals and the potential for a stronger-than-expected recovery. The bank increased forecasts through 2028 and lifted its blue sky scenarios, which model a more pronounced rebound from the freight downturn. LTL and truckload shares have already rallied about 70% on average since Goldman's June 2025 sector upgrade and 46% year-to-date, but the firm said early cycle momentum and the start of an earnings upgrade cycle keep it involved on a relative basis. For LTL carriers, recent mid-quarter updates show second-quarter volumes and some pricing trends running ahead of prior forecasts, with the pace of year-over-year shipment declines easing faster than expected and signs of a potential volume inflection later this year. In truckload, spot rates excluding fuel are averaging about 30% higher year-over-year in the second quarter, with more recent pricing gains topping 40%, and contract pricing is also improving, leading Goldman to raise revenue-per-mile and profit forecasts for the second half of 2026 and beyond.