Forward Air (NASDAQ: FWRD) has seen its stock price plummet to $15 per share, a significant drop from its peak of $125 in January 2022. The stock was trading at $92 in early June 2022 before the Federal Reserve began increasing rates, and has since fallen 84% from that level. The company’s acquisition of Omni Logistics also contributed to the decline in stock price, with concerns raised by investors, including activist investor Ancora, leading to a significant correction in the stock price. Despite this, the acquisition was eventually completed in January this year at a revised deal value of $2.1 billion, down from the initial $3.2 billion deal.
Transportation companies, including Forward Air, have been facing soft demand, impacting their earnings performance. Forward Air’s earnings have been lower than street expectations over the last four quarters, further weighing on its stock price. Despite this, the stock has seen fluctuations in returns, with a 58% increase in 2021, followed by a -13% decrease in 2022 and a -40% decrease in 2023. Comparatively, the S&P 500 has seen mixed performance over the same period, indicating that FWRD has underperformed the benchmark index recently.
Amidst uncertain macroeconomic conditions, including high oil prices and elevated interest rates, the future performance of FWRD stock remains uncertain. However, a recent upgrade by a research firm led to a 22% increase in the stock price, with analysts’ average price estimates suggesting over 45% upside potential from the current market price. The company’s performance during the 2022 inflation shock, compared to the 2007-08 crisis, provides insights into its resilience during turbulent market conditions.
Forward Air’s fundamentals over recent years have shown a mixed performance, with revenue increasing from $1.3 billion in 2020 to $1.6 billion in the last twelve months, but experiencing an 18% year-on-year fall in 2023. Earnings per share also saw a significant increase from $0.87 in 2020 to $6.52 in 2023. However, the company’s total debt has surged to $2.1 billion, while cash has increased to $152 million, raising concerns about its ability to meet near-term obligations.
With the Federal Reserve’s efforts to control inflation and improve market sentiments, there is potential for future gains in FWRD stock once fears of a recession are alleviated. While recent upgrades and positive actions may boost the stock price, it is unlikely to reach previous levels anytime soon. High debt levels remain a near-term concern for the company, which investors should consider when evaluating the stock for potential investment.
