Old Dominion Freight Line (ODFL)

Freight carrier Old Dominion (NASDAQ:ODFL) met Wall Streets revenue expectations in Q4 CY2025, but sales fell by 5.7% year on year to $1.31 billion. Its GAAP profit of $1.09 per share was 2.9% above analysts’ consensus estimates.

Company Overview

With its name deriving from the Commonwealth of Virginia’s nickname, Old Dominion (NASDAQ:ODFL) delivers less-than-truckload (LTL) and full-container load freight.

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 J.B. Hunt (NASDAQ:JBHT), Saia (NASDAQ:SAIA), and XPO (NYSE:XPO).

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Old Dominion Freight Line’s 6.5% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Old Dominion Freight Line’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 3.2% annually.

We can dig further into the company’s revenue dynamics by analyzing its number of units sold, which reached 2.56 million in the latest quarter. Over the last two years, Old Dominion Freight Line’s units sold averaged 4.6% year-on-year declines. Because this number is in line with its revenue growth, we can see the company kept its prices fairly consistent.

This quarter, Old Dominion Freight Line reported a rather uninspiring 5.7% year-on-year revenue decline to $1.31 billion of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 1.8% over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.

At StockStory, we prefer high gross margin businesses because they indicate the company has pricing power or differentiated products, giving it a chance to generate higher operating profits.

Old Dominion Freight Line’s unit economics are great compared to the broader industrials sector and signal that it enjoys product differentiation through quality or brand. As you can see below, it averaged an excellent 39.5% gross margin over the last five years. That means Old Dominion Freight Line only paid its suppliers $60.48 for every $100 in revenue.

In Q4, Old Dominion Freight Line produced a 39.9% gross profit margin, in line with the same quarter last 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.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Old Dominion Freight Line has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 27.1%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Old Dominion Freight Line’s operating margin decreased by 1.7 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.

This quarter, Old Dominion Freight Line generated an operating margin profit margin of 23.3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Old Dominion Freight Line, its EPS declined by 3.2% annually over the last five years while its revenue grew by 6.5%. 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 Old Dominion Freight Line’s earnings can give us a better understanding of its performance. As we mentioned earlier, Old Dominion Freight Line’s operating margin was flat this quarter but declined by 1.7 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.

Old Dominion Freight Line’s two-year annual EPS declines of 7.3% were bad and lower than its two-year revenue losses.

In Q4, Old Dominion Freight Line reported EPS of $1.09, down from $1.23 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 2.9%. Over the next 12 months, Wall Street expects Old Dominion Freight Line’s full-year EPS of $4.83 to grow 3.5%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Old Dominion Freight Line 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 14.9% over the last five years.

Taking a step back, we can see that Old Dominion Freight Line’s margin expanded by 3.6 percentage points during that time. This shows the company is heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell.

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).

Although Old Dominion Freight Line hasn’t been the highest-quality company lately because of its poor bottom-line (EPS) performance, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 32.7%, splendid for an industrials business.

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. Over the last few years, Old Dominion Freight Line’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Revenue was in line, but EPS managed to beat. Overall, this print was fine. The stock remained flat at $189.78 immediately following the results.

Updated: February 4, 2026 at 8:08 AM EST

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

Old Dominion Freight Line doesn’t pass our quality test. To begin with, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its impressive operating margins show it has a highly efficient business model, 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.

Old Dominion Freight Line’s P/E ratio based on the next 12 months is 37.6x. This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $167.79 on the company (compared to the current share price of $189.78), implying they don’t see much short-term potential in Old Dominion Freight Line.