ArcBest Corporation (ARCB): A Bull Case Theory

We came crossed a bullish thesis connected ArcBest Corporation connected Valueinvestorsclub.com by leob710. In this article, we volition summarize the bulls’ thesis connected ARCB. ArcBest Corporation's stock was trading astatine $87.51 arsenic of January 13th. ARCB’s trailing and guardant P/E were 20.79 and 17.76 respectively according to Yahoo Finance.

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ArcBest (ARCB) is simply a century-old, multi-segment logistics operator anchored by a unionized less-than-truckload (LTL) web and an asset-light brokerage and managed proscription business. The company operates 239 service centers across North America, with roughly 56% of its ~15,000 employees represented by the Teamsters, making it the past publically traded predominantly unionized LTL carrier.

ArcBest’s 2024 gross of $4.53 cardinal is divided betwixt its asset-based LTL conception ($3.33 billion, 74% of total, 10.2% EBITDA margin) and its asset-light logistics segment ($1.20 billion, 3–4% EBITDA margin), enabling ~20,000 regular shipments with an mean haul of ~1,100 miles. Its 2024 corporate bargaining statement locks successful predictable 4.2% annual labor cost escalations done mid-2028.

The North American LTL market, valued astatine $85 billion, is highly consolidated, with the apical 10 carriers controlling 75% of revenue. Yellow’s 2023 liquidation removed ~9–10% of nationalist capacity, redistributing assets to rational operators and improving complaint discipline, which directly benefits ArcBest.

Despite a heavy freight recession from 2023–25, manufacture pricing has remained rational, and a humble manufacturing rebound could normalize volumes quickly. ArcBest’s unionized, higher-cost operation creates important operating leverage: shipment weights collapsed successful 2024–25, amplifying EBITDA declines, but immoderate betterment successful tonnage oregon oversized freight premix could dramatically assistance earnings.

Trading adjacent its liquidation worth of $50–$84 per share, based connected terminal, fleet, and brokerage assets, ArcBest offers asymmetric upside. A mid-cycle betterment could thrust 2028 EPS to $10–12, portion normalization successful shipment weights could propulsion EPS to $18–20, implying a 2–3x imaginable upside. Catalysts see concern recovery, tonnage normalization, terminal monetization, and imaginable M&A. With constricted leverage, a unsocial niche successful LTL, and a hard-asset floor, ArcBest presents a compelling risk/reward accidental for investors astatine the bottommost of the cycle.

Previously we covered a bullish thesis connected Old Dominion Freight Line, Inc. (ODFL) by Richard Toad successful October 2024, which highlighted the company’s standard advantages, union-free outgo structure, precocious ROIC, and disciplined web reinvestment. The company's banal terms has depreciated astir by 12.49% since our coverage. The thesis inactive stands arsenic ODFL’s operational moat remains strong. leob710 shares a akin position but emphasizes ArcBest’s unionized structure, higher leverage, and upside from freight betterment and plus monetization.