Reviewing Covenant Transport (CVTI) & Heartland Express (HTLD)

Covenant Transport (NASDAQ: CVTI) and Heartland Express (NASDAQ:HTLD) are both small-cap transportation companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, profitability, risk and earnings.

Earnings and Valuation

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This table compares Covenant Transport and Heartland Express’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Covenant Transport $705.01 million 0.78 $55.43 million $0.84 35.65
Heartland Express $607.34 million 2.48 $75.17 million $0.51 35.41

Heartland Express has lower revenue, but higher earnings than Covenant Transport. Heartland Express is trading at a lower price-to-earnings ratio than Covenant Transport, indicating that it is currently the more affordable of the two stocks.

Dividends

Heartland Express pays an annual dividend of $0.08 per share and has a dividend yield of 0.4%. Covenant Transport does not pay a dividend. Heartland Express pays out 15.7% of its earnings in the form of a dividend.

Insider & Institutional Ownership

63.1% of Covenant Transport shares are held by institutional investors. Comparatively, 61.6% of Heartland Express shares are held by institutional investors. 35.2% of Covenant Transport shares are held by insiders. Comparatively, 42.1% of Heartland Express shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Covenant Transport has a beta of 1.53, suggesting that its share price is 53% more volatile than the S&P 500. Comparatively, Heartland Express has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.

Profitability

This table compares Covenant Transport and Heartland Express’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Covenant Transport 7.94% 6.26% 2.51%
Heartland Express 12.38% 7.84% 5.49%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Covenant Transport and Heartland Express, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Covenant Transport 0 2 2 0 2.50
Heartland Express 3 5 0 0 1.63

Covenant Transport currently has a consensus price target of $32.25, suggesting a potential upside of 7.68%. Heartland Express has a consensus price target of $20.29, suggesting a potential upside of 12.32%. Given Heartland Express’ higher possible upside, analysts plainly believe Heartland Express is more favorable than Covenant Transport.

Summary

Heartland Express beats Covenant Transport on 9 of the 16 factors compared between the two stocks.

About Covenant Transport

Covenant Transportation Group, Inc., together with its subsidiaries, provides truckload transportation and brokerage services primarily in the continental United States. It offers long haul, dedicated, temperature-controlled, and regional solo-driver services; long haul, regional, dedicated, and intermodal temperature-controlled services; and regional solo-driver and dedicated services. The company also provides ancillary services, including freight brokerage services and accounts receivable factoring. It serves transportation companies, such as freight forwarders, less-than-truckload carriers, and third-party logistics providers; and traditional truckload customers, including manufacturers, retailers, and food and beverage shippers. As of December 31, 2017, the company operated 2,559 tractors and 7,134 trailers. Covenant Transportation Group, Inc. was founded in 1986 and is headquartered in Chattanooga, Tennessee.

About Heartland Express

Heartland Express, Inc., through its subsidiaries, operates as a short-to-medium haul truckload carrier in the United States and Canada. The company primarily provides nationwide asset-based dry van truckload service for shippers from Washington to Florida and New England to California; and temperature-controlled transportation services. It primarily transports appliances, automotive parts, consumer products, paper products, packaged foodstuffs, and retail goods. The company principally serves retailers and manufacturers. Heartland Express, Inc. was founded in 1978 and is headquartered in North Liberty, Iowa.

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