USA Truck Inc. (NASDAQ:USAK) stunned investors with stronger than expected numbers for the final quarter. The share price of USA Truck soared as much as 21% after the earnings announcement. However, analysts believe the price has further upside potential despite the recent rally.
Here’s How USA Truck Inc. Posted Higher Than Expected Financial Numbers
The company’s revenue increased 19.8% year over year to $83.8 million in the final quarter of FY2017. The double-digit growth in its revenue was primarily supported by a 20.1% growth in base revenue per loaded mile.
USA Truck generated base revenue per loaded mile of $2.106 in the fourth quarter, representing a growth of 20.1% over the past year quarter. Base revenue per loaded mile also increased 13.5% sequentially over 3Q17. The increased participation in seasonal peak freight and the ongoing review of pricing and network strategies led the company to post stronger base revenue per loaded mile.
Additionally, the company’s performance in terms of margin improvement impressed investors.
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USA Truck posted operating earnings growth of $9.7 million year-over-year and a 1,460 basis point enhancement in adjusted operating ratio. Consequently, the company turned negative earnings of $3.8 million in the past year quarter to the net income of $14.8 million in the final quarter of 2017.
President and CEO James Reed commented, “The fourth quarter adjusted results represent the third highest adjusted EPS for USA Truck in the last 10 years. We committed to improved operational and financial results. We have now delivered on that commitment for the second consecutive quarter.”
Bullish Bets Enhanced Traders Sentiments
Stephens Research increased the USA Truck stock price target to $30 with Overweight ratings. Their analyst team said, “the impressive Q4 results posted by USA Truck solidify the turnaround story.”
USAK stock grew more than 21% after the earnings announcement, up 39% in the past three months. USA Truck shares had experienced the eye-catching rally of 136% in the past twelve months. Nevertheless, its valuations are trading below the industry average, thanks to strong financial numbers. In the trailing twelve months, its price to book ratio was hovering around 0.4 times to sales, sharply lower from the industry average of 1.6 times.
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