KNX - Truckload Could Have Some Upside But Heartland Express Is Harder To Love As The Play On It

• Heartland posted double-digit revenue growth in the third quarter, with a year-ago acquisition likely offsetting underlying erosion in freight volumes and lower than expected expenses.
• As is typical for the sector, higher spot rates have seen truckload stocks come off their recent highs as investors worry that pricing has peaked and more capacity is coming.
• The market may well be underestimating the revenue and margin leverage Heartland stands to gain from significant contract pricing increases in a tight truckload market.
• Key remaining questions include whether Heartland has finally stemmed a decade-plus decline in core margins and whether the company can finally leverage the national network it paid up to build through M&A.
• Heartland has upside to $20 and beyond, but it's far from the safe play on a potentially undervalued truckload sector.

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