Why ArcBest Stock Is Soaring Today

What happened

Shares of ArcBest (NASDAQ: ARCB) are soaring today, up 28.4% as of 11:35 a.m. EDT, after the freight and logistics specialist blew away Wall Street with a boffo earnings report.

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ArcBest earned $0.37 per share (including $0.08 worth of one-time gains) in Q1, far better results than the $0.07-per-share loss that Wall Street had been predicting. Quarterly sales of $700 million likewise exceeded expectations for revenue of $690.4 million.

So what

ArcBest's sales grew 7% year over year in the first quarter. The company's $0.37-per-share profit completely canceled out last year's $0.29-per-share Q1 loss, and leaves the company with a record of $2.88 in trailing earnings per diluted share over the past 12 months.

CEO Judy McReynolds credited "strong market demand" for trucking services for the company's success in Q1. What's most curious about the results, though, is that ArcBest appears to be making more money by doing less work. "Tonnage per day" and "shipments per day" both declined during the quarter, yet "revenue per day" increased as ArcBest pushed through an 8.9% increase in revenue per hundredweight (that's per 100 pounds of cargo shipped). This seems to confirm recent trends of strong demand for trucking services inflating prices, even as supply struggles to keep up with demand.

Now what

McReynolds predicts that these trends will continue as the year progresses, although ArcBest did not provide specific guidance for what revenue and earnings investors should expect. For what it's worth, analysts on Wall Street think ArcBest will end up earning $2.32 per share this year on sales of just under $3 billion.

But given the strong market for trucking, and the fact that ArcBest has earned far more than that over the last 12 months, I suspect the analysts may turn out to be too conservative on this.

Investors today seem to think so, too.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.