Covenant Logistics’ first quarter saw revenue and adjusted earnings fall below Wall Street expectations, but the market responded positively due to management’s emphasis on navigating a difficult freight environment and improving operational execution late in the period. CEO David Parker attributed the quarter’s results to a strategic focus on expanding the company’s specialized dedicated fleet and rationalizing lower-return segments. Weather disruptions and avian influenza weighed heavily on miles driven and utilization, with President Paul Bunn noting that, “the combination of weather and avian influenza took its toll on miles.” Despite these headwinds, management highlighted resilience in its managed freight operations and incremental margin improvements, even as overall results remained pressured by external factors.
Is now the time to buy CVLG? Find out in our full research report (it’s free).
Covenant Logistics (CVLG) Q1 CY2025 Highlights:
- Revenue: $269.4 million vs analyst estimates of $282.2 million (3.4% year-on-year decline, 4.5% miss)
- Adjusted EPS: $0.32 vs analyst expectations of $0.34 (5% miss)
- Adjusted EBITDA: $29.42 million vs analyst estimates of $33.49 million (10.9% margin, 12.1% miss)
- Operating Margin: 2.8%, up from 1.6% in the same quarter last year
- Market Capitalization: $606.5 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Covenant Logistics’s Q1 Earnings Call
- Jason Seidl (TD Cowen) asked about the competitive pressure in non-specialized dedicated segments. President Paul Bunn said the market is “really competitive out there,” and margins should improve as weather and poultry impacts subside, but commoditized business remains challenging.
- Jason Seidl (TD Cowen) inquired if Covenant would further reduce exposure to commoditized dedicated contracts. Bunn responded that the company has already exited much of this business and continues to prioritize specialty deals.
- Daniel Imbro (Stephens Inc.) sought clarification on LTL (less-than-truckload) market trends and government contract performance. CEO David Parker noted weakness in national LTL customers but strength in government-oriented AAT business, with equipment expansion driving growth opportunities.
- Daniel Imbro (Stephens Inc.) questioned the rationale behind the new $50 million share repurchase program versus M&A. CFO Tripp Grant said the approach remains balanced—share repurchases will not preclude pursuing the right acquisition if it fits strategic and financial criteria.
- Jeff Kauffman (Vertical Research Partners) requested details on how avian influenza is impacting the protein business and the expected recovery timeline. Bunn explained recovery should be complete by June as flocks are replenished and feed volumes return to normal.
Catalysts in Upcoming Quarters
In the coming quarters, our team will watch closely for (1) a rebound in poultry-related volumes and associated margin recovery, (2) continued progress in shifting the fleet toward specialized dedicated contracts, and (3) improved warehouse profitability as new operations stabilize and customer rate negotiations advance. Execution on tuck-in acquisitions and prudent capital deployment will also be important metrics of strategic progress.
Covenant Logistics currently trades at $23.61, up from $18.79 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
