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Old Dominion Slashes Dividend by 35% Amid Coronavirus Woes

Zacks

Old Dominion Freight Line ODFL has reduced its quarterly cash dividend by 34.8% as the company grapples with coronavirus-related headwinds.

The company’s board reduced its quarterly dividend to 15 cents per share (annually: 60 cents), from the previous payout of 23 cents. The amount is payable to shareholders on Jun 17, of record as of Jun 3. It was only in February that the company had approved a 35.3% hike in quarterly dividend to 23 cents per share.

In the first quarter of 2020, the Zacks Rank #3 (Hold) company rewarded its shareholders with $196.6 million through dividend payments and share buybacks. During 2019, it returned $295.5 million to shareholders. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Old Dominion Freight Line, Inc. Price

Old Dominion Freight Line, Inc. Price

Old Dominion Freight Line, Inc. price | Old Dominion Freight Line, Inc. Quote



Coronavirus Impact

With coronavirus having crippled the domestic economy, Old Dominion’s demand for services has declined substantially. The company reduced its estimated expenditures for real estate during the March quarter by approximately $50 million due to some projects being deferred on account of sluggish shipments. Although the impact was limited in the first quarter, the effect is likely to magnify in the second quarter as supply chain disruptions aggravate.

During the first quarter, Old Dominion’s earnings per share matched the Zacks Consensus Estimate, while revenues fell short of the same. Results were affected by a soft freight environment as well as weak demand in the latter half of March due to the coronavirus woes. The company’s peers like J.B. Hunt Transport Services JBHT, Knight-Swift Transportation Holdings Inc. KNX and Landstar System LSTR also witnessed substantial softness in first-quarter performance due to the coronavirus concerns.

While J.B. Hunt and Knight-Swift carry a Zacks Rank #3, Landstar carries a Zacks Rank #4 (Sell).

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