Schneider (SNDR)

Transportation company Schneider (NYSE:SNDR) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 10.4% year on year to $1.45 billion. Its non-GAAP profit of $0.12 per share was 41.3% below analysts’ consensus estimates.

Company Overview

Employing thousands of drivers across the country to make deliveries, Schneider (NYSE:SNDR) makes full truckload and intermodal deliveries regionally and across borders.

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 C.H. Robinson (NASDAQ:CHRW), FedEx (NYSE:FDX), and J.B. Hunt (NASDAQ:JBHT).

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. Over the last five years, Schneider grew its sales at a tepid 4.8% compounded annual growth rate. This was below our standard for the industrials sector and is a poor baseline 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. Schneider’s recent performance shows its demand has slowed as its revenue was flat over the last two years. We also note many other Ground Transportation businesses have faced declining sales because of cyclical headwinds. While Schneider’s growth wasn’t the best, it did do better than its peers.

We can dig further into the company’s revenue dynamics by analyzing its most important segments, Truckload and Logistics, which are 43% and 22.9% of revenue. Over the last two years, Schneider’s Truckload revenue (road freight) averaged 6.3% year-on-year growth. On the other hand, its Logistics revenue (supply chain, warehousing) averaged 4.5% declines.

This quarter, Schneider reported year-on-year revenue growth of 10.4%, and its $1.45 billion of revenue exceeded Wall Street’s estimates by 1.4%.

Looking ahead, sell-side analysts expect revenue to grow 4.5% 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.

All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products and commands stronger pricing power.

Schneider has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 18.4% gross margin over the last five years. That means Schneider paid its suppliers a lot of money ($81.63 for every $100 in revenue) to run its business.

In Q3, Schneider produced a 29.8% gross profit margin, up 13.6 percentage points year on year. Schneider’s full-year margin has also been trending up over the past 12 months, increasing by 4.8 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Schneider was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.4% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

Looking at the trend in its profitability, Schneider’s operating margin decreased by 5.6 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 Schneider’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, Schneider generated an operating margin profit margin of 2.4%, 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 Schneider, its EPS declined by 10.2% annually over the last five years while its revenue grew by 4.8%. 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 Schneider’s earnings can give us a better understanding of its performance. As we mentioned earlier, Schneider’s operating margin was flat this quarter but declined by 5.6 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 Schneider, its two-year annual EPS declines of 38.8% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Schneider reported adjusted EPS of $0.12, down from $0.18 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Schneider’s full-year EPS of $0.69 to grow 56.6%.

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.

Schneider has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.5%, subpar for an industrials business.

Schneider’s free cash flow clocked in at $76.1 million in Q3, equivalent to a 5.2% margin. The company’s cash profitability regressed as it was 3.4 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.

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).

Schneider’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 11.4%, slightly better than typical 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, Schneider’s ROIC has decreased significantly 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.

Schneider reported $194.1 million of cash and $522.2 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 $625.5 million of EBITDA over the last 12 months, we view Schneider’s 0.5× net-debt-to-EBITDA ratio as safe. We also see its $8.2 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.

It was good to see Schneider narrowly top analysts’ revenue expectations this quarter. On the other hand, its EBITDA missed and its EPS fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 7.7% to $20.89 immediately after reporting.

Updated: December 4, 2025 at 10:25 PM EST

Before deciding whether to buy Schneider or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

We cheer for all companies making their customers lives easier, but in the case of Schneider, we’ll be cheering from the sidelines. First off, its revenue growth was uninspiring over the last five years, and analysts don’t see anything changing 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.

Schneider’s P/E ratio based on the next 12 months is 26.4x. This valuation tells us a lot of optimism is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $25.61 on the company (compared to the current share price of $25.35).