Summary
Daseke operates as a specialty trucking and logistics company that has worked hard to create value for shareholders.
Recent performance has been mixed, but the outlook for the company is generally positive.
For investors who can handle the volatility and who want a small, cheap trucking firm, now might be the time to consider buying in.
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vitpho/iStock via Getty Images The trucking industry is one of the most significant industries in the US. Without it, the transportation of goods across the nation would be significantly impaired. This industry is dominated by large players, but that doesn’t mean that there aren’t small firms that warrant consideration. One interesting prospect is a company called Daseke ( DSKE ). Following a merger of two entities back in 2017, the company approximately doubled in size to the player that it is today. Even so, it is still small relative to other firms in the market. Prior to the COVID-19 pandemic, Daseke exhibited some topline growth but it continued to struggle on its bottom line. The pandemic had some interesting impacts on the enterprise, but now that the worst appears behind it, the company is showing some signs of a return to growth. Add on to this the fact that shares in the business look quite cheap at this moment, and it is hard to imagine investors not liking what they see here. A niche trucking firm
Daseke operates as a provider and consolidator of transportation and logistics solutions for customers in North America. In particular, the company focuses on offering flatbed and specialized (open-deck) freight services on the continent. In that regard, while the company is a small player in the broader trucking space, it considers itself the largest in the flatbed and specialized logistics category. In all, the company boasts approximately 6,700 customers throughout the US, Canada, and Mexico. During its latest fiscal year, the company’s drivers, a mixture of company employees and owner-operators, drove a combined 442.8 million miles.
Operationally, Daseke is set up as the combination of two different segments. The first of these is called Flatbed Solutions. As its name suggests, this segment focuses on delivering transportation and logistics solutions that require the use of a flatbed and retractable cited transportation equipment. According to management, in the company’s 2020 fiscal year, this particular segment generated about 40% of the firm’s overall sales. They did this through the 2,591 tractors and the 4,255 trailers that that segment has.
The other, larger, segment of the company is called Specialized Solutions. This particular segment focuses on delivering transportation and logistics solutions that require the use of specialized trailering equipment. The bulk of the company’s sales, approximately 60% in all, came from this particular segment. And customers were serviced here through the 2,461 tractors and the 7,324 trailers in the company’s portfolio. *Created by Author
When evaluating the financial performance of the company over time, investors would be wise to focus on the 2018 timeframe and beyond. This is because a merger of two entities took place in 2017 that nearly doubled the company’s sales as a result. In short, prior years would give the impression that the company’s growth was much greater than what it actually would have been if we adjust for the merger activity the company engaged in. Since 2018, things have been a bit mixed. As an example, between 2018 and 2019, revenue jumped from $1.61 billion to $1.74 billion. But then, in 2020, driven by the COVID-19 pandemic, sales dropped to $1.45 billion. This year has been a bit slow, but things are finally looking up for the enterprise. Revenue in the first nine months of the company’s 2021 fiscal year totaled $1.16 billion. That represents an increase of 3.9% compared to the $1.12 billion generated one year earlier. Much of this gain took place in the third quarter, with revenue of $424.6 million coming in 13% higher than the $375.8 million reported one year earlier.
Profitability for the company has been rather inconsistent in recent years. After generating a net loss of $10.1 million in 2018, the company’s loss ballooned to $312.4 million in 2019. But then, in 2020, the firm generated a slight profit of $1.3 million. Cash flow figures have been more reliable. The company went from generating operating cash flow of $105.3 million in 2018 to $144.9 million last year. If […]
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