Why Shares of Covenant Transportation Group, Inc. Popped 16% Today

What happened

Shares of trucking company Covenant Transportation Group, Inc. (NASDAQ: CVTI) jumped as much as 15.5% in trading Friday after reporting first quarter earnings. At 3:25 p.m. EDT shares were still up 13.1% on the day.

So what

First-quarter revenue rose 1.5% to $158.7 million, although it was down 3.1% to $140.1 million when fuel surcharges are taken out. On the bottom line, net income fell from $4.4 million a year ago to $0.5 million, or $0.03 per share, but still came in a penny ahead of expectations.

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Trends in the company's asset-based operations were fairly strong with revenue up $2.9 million to $145.6 million and average freight revenue per tractor per week up from $3,721 a year ago to $3,755.

Now what

Investors are reading a lot into a very small earnings beat this quarter, but they must like the earnings trends. For the full year, analysts are expecting earnings of $0.92 per share, meaning shares trade at about 21 times forward-earnings estimates. That's a steep price given the decline in revenue without the fuel surcharge and I'm not very bullish on a small earnings beat. But investors should watch the company's trends throughout 2017 to see if higher expectations are going to be met or if the stock has gotten ahead of itself in trading.

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