Heartland Express (HTLD)

Freight delivery company Heartland Express (NASDAQ:HTLD) fell short of the markets revenue expectations in Q3 CY2025, with sales falling 24.4% year on year to $196.5 million. Its non-GAAP loss of $0.11 per share was 9.4% above analysts’ consensus estimates.

Company Overview

Founded by the son of a trucker, Heartland Express (NASDAQ:HTLD) offers full-truckload deliveries across the United States and Mexico.

The growth of e-commerce and global trade continues to drive demand for shipping services, especially last-mile delivery, presenting opportunities for ground transportation companies. The industry continues to invest in data, analytics, and autonomous fleets to optimize efficiency and find the most cost-effective routes. Despite the essential services this industry provides, ground transportation companies are still at the whim of economic cycles. Consumer spending, for example, can greatly impact the demand for these companies’ offerings while fuel costs can influence profit margins.

Competitors offering similar products include Schneider (NYSE:SNDR), Werner (NASDAQ:WERN), and J.B. Hunt (NASDAQ:JBHT).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Heartland Express grew its sales at a tepid 5.8% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Heartland Express’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 17.8% annually. Heartland Express isn’t alone in its struggles as the Ground Transportation industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

This quarter, Heartland Express missed Wall Street’s estimates and reported a rather uninspiring 24.4% year-on-year revenue decline, generating $196.5 million of revenue.

Looking ahead, sell-side analysts expect revenue to decline by 13% over the next 12 months. Although this projection is better than its two-year trend, it’s hard to get excited about a company that is struggling with demand.

Heartland Express’s unit economics are better than the typical industrials business, signaling its products are somewhat differentiated through quality or brand. As you can see below, it averaged a decent 30.4% gross margin over the last five years. Said differently, Heartland Express paid its suppliers $69.65 for every $100 in revenue.

In Q3, Heartland Express produced a 28.2% gross profit margin, up 1.9 percentage points year on year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Heartland Express was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.6% was weak for an industrials business.

Analyzing the trend in its profitability, Heartland Express’s operating margin decreased by 20.6 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. We’ve noticed many Ground Transportation companies also saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction, but Heartland Express’s performance was poor no matter how you look at it. It shows that costs were rising and it couldn’t pass them onto its customers.

In Q3, Heartland Express generated an operating margin profit margin of negative 3.7%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Heartland Express, its EPS declined by 20.6% annually over the last five years while its revenue grew by 5.8%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

Diving into the nuances of Heartland Express’s earnings can give us a better understanding of its performance. As we mentioned earlier, Heartland Express’s operating margin was flat this quarter but declined by 20.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Heartland Express, its two-year annual EPS declines of 84.6% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Heartland Express reported adjusted EPS of negative $0.11, up from negative $0.12 in the same quarter last year. This print beat analysts’ estimates by 9.4%. Over the next 12 months, Wall Street expects Heartland Express to improve its earnings losses. Analysts forecast its full-year EPS of negative $0.45 will advance to negative $0.31.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Heartland Express has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 13.4% over the last five years. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.

Taking a step back, we can see that Heartland Express’s margin dropped by 19.5 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

Heartland Express’s free cash flow clocked in at $20.65 million in Q3, equivalent to a 10.5% margin. The company’s cash profitability regressed as it was 4.8 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Heartland Express historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.6%, somewhat low compared to the best industrials companies that consistently pump out 20%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Heartland Express’s ROIC has decreased significantly over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Heartland Express reported $32.69 million of cash and $187.4 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $132.2 million of EBITDA over the last 12 months, we view Heartland Express’s 1.2× net-debt-to-EBITDA ratio as safe. We also see its $11.64 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Heartland Express blew past analysts’ adjusted operating income expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $9.23 immediately following the results.

Updated: December 17, 2025 at 10:40 PM EST

Before investing in or passing on Heartland Express, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Heartland Express falls short of our quality standards. To begin with, its revenue growth was uninspiring over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Heartland Express’s forward price-to-sales ratio is 1x. The market typically values companies like Heartland Express based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy.

Wall Street analysts have a consensus one-year price target of $8.30 on the company (compared to the current share price of $9.23), implying they don’t see much short-term potential in Heartland Express.