3 Reasons to Avoid SNDR and 1 Stock to Buy Instead

Schneider has been treading water for the past six months, recording a small loss of 3.3% while holding steady at $26.09. The stock also fell short of the S&P 500’s 5.1% gain during that period.

Is there a buying opportunity in Schneider, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

We're cautious about Schneider. Here are three reasons why you should be careful with SNDR and a stock we'd rather own.

Why Do We Think Schneider Will Underperform?

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

1. Long-Term Revenue Growth Disappoints

A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Unfortunately, Schneider’s 2.2% annualized revenue growth over the last five years was sluggish. This was below our standards.

2. EPS Trending Down

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Sadly for Schneider, its EPS declined by 11% annually over the last five years while its revenue grew by 2.2%. This tells us the company became less profitable on a per-share basis as it expanded.

3. New Investments Fail to Bear Fruit as ROIC Declines

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

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. Over the last few years, Schneider’s ROIC has unfortunately decreased. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Final Judgment

We see the value of companies helping their customers, but in the case of Schneider, we’re out. With its shares trailing the market in recent months, the stock trades at 23× forward price-to-earnings (or $26.09 per share). At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere. Let us point you toward the Amazon and PayPal of Latin America.

Stocks We Would Buy Instead of Schneider

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