Universal Logistics (ULH)

Transportation and logistics solutions provider Universal Logistics (NASDAQ:ULH) missed Wall Street’s revenue expectations in Q2 CY2025, with sales falling 14.8% year on year to $393.8 million. Its GAAP profit of $0.32 per share was 5.9% below analysts’ consensus estimates.

Company Overview

Founded in 1932, Universal Logistics (NASDAQ:ULH) is a provider of customized transportation and logistics solutions operating throughout the United States and in Mexico, Canada, and Colombia.

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 in the transportation and logistics industry include J.B. Hunt (NASDAQ:JBHT), C.H. Robinson (NASDAQ:CHRW), and XPO Logistics (NYSE:XPO)

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Universal Logistics’s sales grew at a sluggish 3.7% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a tough 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. Universal Logistics’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 4.1% annually. Universal Logistics 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, Universal Logistics missed Wall Street’s estimates and reported a rather uninspiring 14.8% year-on-year revenue decline, generating $393.8 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 2.1% over the next 12 months. While this projection implies its newer products and services will spur 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.

Universal Logistics has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 20.1% gross margin over the last five years. Said differently, Universal Logistics had to pay a chunky $79.93 to its suppliers for every $100 in revenue.

Universal Logistics’s gross profit margin came in at 20.9% this quarter, marking a 4.1 percentage point decrease from 25% in the same quarter last year. Universal Logistics’s full-year margin has also been trending down over the past 12 months, decreasing by 1.2 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Universal Logistics’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 9.1% over the last five years. This profitability was higher than the broader industrials sector, showing it did a decent job managing its expenses.

Looking at the trend in its profitability, Universal Logistics’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. We like to see margin expansion, but we’re still happy with Universal Logistics’s performance, especially when considering the cycle turned in the wrong direction and most peers observed plummeting revenue and margins.

This quarter, Universal Logistics generated an operating margin profit margin of 5.1%, down 8.1 percentage points year on year. Since Universal Logistics’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

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.

Universal Logistics’s EPS grew at an astounding 27.2% compounded annual growth rate over the last five years, higher than its 3.7% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

We can take a deeper look into Universal Logistics’s earnings quality to better understand the drivers of its performance. A five-year view shows that Universal Logistics has repurchased its stock, shrinking its share count by 2.1%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Universal Logistics, its two-year annual EPS declines of 31.5% mark a reversal from its (seemingly) healthy five-year trend. We hope Universal Logistics can return to earnings growth in the future.

In Q2, Universal Logistics reported EPS at $0.32, down from $1.17 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Universal Logistics’s full-year EPS of $2.33 to grow 11.6%.

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.

Universal Logistics broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders.

Taking a step back, an encouraging sign is that Universal Logistics’s margin expanded by 1 percentage points during that time. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Universal Logistics hasn’t been the highest-quality company lately because of its poor top-line performance, it historically found a few growth initiatives that worked out well. Its five-year average ROIC was 15.4%, impressive 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. Unfortunately, Universal Logistics’s ROIC averaged 3.9 percentage point decreases over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Universal Logistics reported $34.2 million of cash and $795.5 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 $254.4 million of EBITDA over the last 12 months, we view Universal Logistics’s 3.0× net-debt-to-EBITDA ratio as safe. We also see its $34.32 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 struggled to find many positives in these results. Its EPS missed and its revenue fell slightly short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $27.39 immediately following the results.

Updated: December 4, 2025 at 10:26 PM EST

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

We cheer for all companies making their customers lives easier, but in the case of Universal Logistics, we’ll be cheering from the sidelines. For starters, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its market-beating ROIC suggests it has been a well-managed company historically, the downside is its projected EPS for the next year is lacking. On top of that, its cash burn raises the question of whether it can sustainably maintain growth.

Universal Logistics’s P/E ratio based on the next 12 months is 37.1x. 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 $18 on the company (compared to the current share price of $16.73).