Truck­ing com­pa­nies lead Ar­kan­sas In­dex

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - DAVID SMITH

The two small­est pub­licly traded truck­ing com­pa­nies in Ar­kan­sas — USA Truck and P.A.M. Trans­porta­tion Ser­vices — had the best per­form­ing stocks in the Ar­kan­sas In­dex in the sec­ond quar­ter.

USA Truck shares rose 17.8 per­cent in the quar­ter that ended Fri­day. Shares of Ton­ti­town-based P.A.M. rose 16.3 per­cent for the quar­ter.

USA Truck’s shares set a 52-week low in the two weeks after its earn­ings re­lease in early May, said Bob Wil­liams, se­nior vice pres­i­dent and manag­ing di­rec­tor of Sim­mons First In­vest­ment Group Inc. in Lit­tle Rock.

The Van Buren trucker’s stock be­gan a re­bound after re­ports of in­sider buy­ing were an­nounced.

“The pro­jec­tions from the new man­age­ment team to re­turn to op­er­at­ing prof­itabil­ity in the third quar­ter was promis­ing,” Wil­liams said. “Thus far, in­vestors have re­sponded pos­i­tively in the hope that the ini­tia­tives and changes will have a con­struc­tive im­pact.”

Last year, P.A.M. had four quar­ters of neg­a­tive earn­ings surprises. But in­vestors were re­warded in the first quar­ter this year with a pos­i­tive re­port and the re­sul­tant share price in­crease, Wil­liams said.

“Earn­ings were buoyed by higher oil prices al­low­ing for in­creased fuel sur­charges to be passed through to cus­tomers,” Wil­liams said. “While the an­nounce­ment of a half mil­lion share buy­back did not pro­duce an im­me­di­ate im­pact on the stock price, the shares have con­tin­ued to drift higher.”

It was a volatile quar­ter for re­tail com­pany stocks, and Dil­lard’s was no ex­cep­tion, Wil­liams said. But the Lit­tle Rock re­tailer’s stock climbed 10.4 per­cent in the past three months.

“After de­liv­er­ing slightly bet­ter than ex­pected quar­terly re­sults, the share price promptly plunged,” Wil­liams said. “In the two days after re­port­ing earn­ings, the shares lost as much as 27 per-

cent. Sub­se­quently, the price re­bounded later in the quar­ter as short sell­ers cov­ered their po­si­tions.”

Only eight of the 18 com­pa­nies in the Ar­kan­sas In­dex had pos­i­tive re­turns for the quar­ter.

“Neg­a­tive earn­ings re­ports seem to be the com­mon theme this quar­ter,” Wil­liams said. “Wall Street is all about manag­ing ex­pec­ta­tions. Over­promis­ing and un­der­de­liv­er­ing on re­sults can re­sult in neg­a­tive con­se­quences for share prices.”

Mur­phy USA of El Do­rado was up 0.9 per­cent, but its 20.6 per­cent was the best gain for the first six months of the year.

Wind­stream Hold­ings of Lit­tle Rock had the big­gest fall, drop­ping 28.8 per­cent in the sec­ond quar­ter. Wind­stream

also had the worst per­for­mance through the first six months of the year, fall­ing 47.1 per­cent.

“Wind­stream con­tin­ues its strat­egy of adding more fiber­rich as­sets and di­ver­si­fy­ing its busi­ness,” Wil­liams said. “De­spite this, the com­pany re­mains de­fined as a high div­i­dend yield story in the de­fen­sive ru­ral tele­com sec­tor. The shares re­main un­der pres­sure by short sell­ers after a dis­ap­point­ing quar­terly earn­ings re­port.”

Fort Smith-based Ar­cBest lost 20.8 per­cent for the quar­ter, the sec­ond worst drop.

Ear­lier this year, the com­pany in­tro­duced a new cor­po­rate struc­ture to bet­ter serve cus­tomers and unify func­tions un­der the Ar­cBest brand, Wil­liams said.

“Share­hold­ers were pun­ished in early May as the sell­ers piled on fol­low­ing a dis­ap­point­ing earn­ings re­port,” Wil­liams said. “Truck­ing is a

fiercely com­pet­i­tive in­dus­try and with ane­mic freight de­mand, Ar­cBest’s man­age­ment has adapted re­mark­ably well. Like oth­ers, Ar­cBest wres­tled with more smaller ship­ments as vol­ume grew but ton­nage fell.”

El Do­rado-based Mur­phy Oil fell 10.4 per­cent for the sec­ond quar­ter.

De­spite its man­age­ment’s ef­forts over the past sev­eral years to move into a stronger and more com­pet­i­tive busi­ness model, Mur­phy Oil has not seen those ef­forts re­flected in its share price for the most re­cent quar­ter, Wil­liams said.

“Oil prices con­tin­ued to be the pri­mary driver in­flu­enc­ing the stock price,” Wil­liams said.

Three of the four banks on the Ar­kan­sas In­dex were down for the sec­ond quar­ter.

Shares of Lit­tle Rock’s Bank of the Ozarks fell 9.9 per­cent for the pe­riod, Home

Banc­Shares of Con­way fell 8 per­cent, and Pine Bluff ’s Sim­mons First Na­tional dropped 4.1 per­cent. Shares of Lit­tle Rock-based Bear State Fi­nan­cial rose 0.6 per­cent.

Garland Binns, a Lit­tle Rock bank­ing at­tor­ney, said he knew of no spe­cific rea­son why the three larger banks’ stocks were off for the quar­ter.

The banks them­selves are do­ing well, Binns said.

“All four banks have great loan port­fo­lios,” Binns said. “The ef­fi­ciency ra­tios of the Ar­kan­sas banks are out­stand­ing. In gen­eral, those banks will con­tinue to per­form well.”

The Ar­kan­sas In­dex of the 18 largest pub­licly traded com­pa­nies in the state was down 1.3 per­cent for the sec­ond quar­ter and down 5.2 per­cent for the first six months of the year.

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