Key upside risks to our target price include improving service and execution that would enable ARCB to see higher yields and incremental margins. Should the freight market inflect, we think ARCB’s top line and earnings would magnify the benefits given its high cyclical torque. Key downside risks include management execution to balance transactional and core business exposure as the volume environment continues to fluctuate. We also see risks to pricing as key LTL players have been working to improve service standards and consistency, which could pose a risk for ARCB’s pricing should its service improvement initiatives not materialize.
|