Covenant Logistics Group (CVLG) AI Stock Analysis

• Market Cap: $528.46M
• Dividend Yield: 1.18%
• Average Volume (3M): 147.65K
• Price to Earnings (P/E): 14.4
• Beta (1Y): 1.12
• Revenue Growth: 0.59%
• EPS Growth: -11.10%
• Country: US
• Employees: 3,100
• Sector: Industrials
• Sector Strength: 78
• Industry: Trucking
• EPS (TTM): 1.39
• Shares Outstanding: 21,855,879
• 10 Day Avg. Volume: 221,057
• 30 Day Avg. Volume: 147,654
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.60
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 4.45
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $32.00
• Price Target Upside: 61.53% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Covenant Logistics Group's stock score is influenced by mixed financial performance with potential for improved profitability, bearish technical trends, and a moderate valuation. The recent earnings call and corporate events show cautious optimism, but challenges such as declining net margins and operational inefficiencies pose risks. While the stock buyback is a positive sign, investors should remain cautious given the current market conditions.

Positive Factors

Margin Improvement

Positive bid season commentary and management's confidence in seeking further rate increases suggest potential margin improvement.

Revenue Growth

Dedicated revenues ex fuel increased 13% as CVLG continues to add tractors into its business.

Stock Buyback

Encouraged by buyback announcement.

Negative Factors

Competitive Pressure

Increasing competitive pressure in the dedicated segment is weighing on growth as CVLG walks away from some business.

Poultry Business Challenges

Weather and pressures on the poultry business due to bird flu present headwinds.

Weather Impact

Severe weather hit margins by approximately 3 points, below forecast.

Covenant Logistics Group Business Overview & Revenue Model

Company Description

Covenant Logistics Group, Inc., together with its subsidiaries, provides transportation and logistics services in the United States. It operates through four segments: Expedited, Dedicated, Managed Freight, and Warehousing. The Expedited segment primarily provides truckload services with high service freight and delivery standards, such as 1,000 miles in 22 hours or 15-minute delivery windows. The Dedicated segment provides customers with committed truckload capacity over contracted periods using equipment either owned or leased by the company. The Managed Freight segment offers brokerage services, including logistics capacity by outsourcing the carriage of customers' freight to third parties; and transport management services, such as logistics services on a contractual basis to customers who prefer to outsource their logistics needs. The Warehousing segment provides day-to-day warehouse management services to customers. The segment also provides shuttle and switching services to shuttling containers and trailers. The company also engages in used equipment sales and leasing business. It serves transportation companies, such as parcel freight forwarders, less-than-truckload carriers, and third-party logistics providers; and traditional truckload customers, including manufacturers, retailers, and food and beverage shippers. As of December 31, 2021, it operated 2,291 tractors and 5,331 trailers. The company was formerly known as Covenant Transportation Group, Inc. and changed its name to Covenant Logistics Group, Inc. in July 2020. Covenant Logistics Group, Inc. was founded in 1986 and is based in Chattanooga, Tennessee.

How the Company Makes Money

Covenant Logistics Group generates revenue primarily through its diverse range of transportation and logistics services. Key revenue streams include expedited and dedicated trucking services, where the company provides time-sensitive and specialized transportation solutions for various industries. Additionally, Covenant earns income from its managed freight services, which involve coordinating and optimizing freight movements for clients. The company also leverages its warehousing and freight brokerage capabilities to enhance its service offerings and capture additional market opportunities. Strategic partnerships and a focus on technology-driven solutions further contribute to its financial performance by improving efficiency and expanding its customer base.

Covenant Logistics Group Financial Statement Overview

Summary

Covenant Logistics Group shows strong revenue generation with challenges in profitability and equity growth. The income statement indicates declining net margins despite efficient cost management. The balance sheet reflects improved debt management but volatility in equity growth. Cash flow analysis shows a robust recovery and strong cash generation, albeit with past volatility.

Income Statement

Covenant Logistics Group showed fluctuating revenue with a slight decrease from 2022 to 2023, but a small recovery in 2024. The gross profit margin remained strong at 100% in 2024, indicating efficient cost management. However, the net profit margin has decreased over the years, reflecting increased costs or competitive pressures. EBIT and EBITDA margins are moderate, suggesting operational efficiency improvements are needed.

Balance Sheet

The company's debt-to-equity ratio has improved significantly by 2024 due to reduced total debt, indicating a lower risk profile. However, the equity ratio has also decreased, suggesting that the company is relying less on equity financing. Return on equity has been volatile, with a decline in recent years. Overall, the balance sheet shows improving debt management but challenges in maintaining equity growth.

Cash Flow

Covenant Logistics Group experienced a strong recovery in operating cash flow in 2024, with a notable increase in free cash flow from the previous year. The free cash flow to net income ratio indicates strong cash generation relative to profits. However, past negative free cash flows highlight potential volatility in cash management.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.13B	1.10B	1.22B	1.05B	838.56M
	Gross Profit
189.65M	164.20M	185.99M	147.28M	109.55M
	EBIT
44.76M	58.82M	48.04M	24.26M	-56.70M
	EBITDA
146.00M	150.15M	105.55M	78.14M	55.40M
	Net Income Common Stockholders
35.92M	55.23M	108.68M	60.73M	-14.12M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
35.62M	2.29M	68.67M	8.41M	8.41M
	Total Assets
997.57M	954.44M	796.64M	651.66M	676.72M
	Total Debt
296.89M	293.46M	179.63M	74.25M	111.59M
	Net Debt
261.27M	291.17M	110.96M	65.84M	103.18M
	Total Liabilities
559.23M	551.02M	419.52M	301.96M	386.07M
	Stockholders Equity
150.39M	403.42M	377.13M	349.70M	290.64M
Cash Flow		Free Cash Flow
122.89M	-132.77M	58.76M	37.93M	-31.01M
	Operating Cash Flow
122.89M	84.84M	159.23M	73.22M	63.04M
	Investing Cash Flow
-107.67M	-235.92M	-86.21M	10.34M	138.05M
	Financing Cash Flow
18.11M	84.71M	-12.77M	-83.56M	-236.27M

Covenant Logistics Group Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 19.81
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CVLG, the sentiment is Neutral. The current price of 19.81 is above the 20-day moving average (MA) of 19.41, below the 50-day MA of 21.98, and below the 200-day MA of 25.66, indicating a neutral trend. The MACD of -0.64 indicates Negative momentum. The RSI at 45.69 is Neutral, neither overbought nor oversold. The STOCH value of 68.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CVLG.

Covenant Logistics Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARCB	68 Neutral	$1.35B	7.74	14.25%	0.82%	-5.69%	51.78%
Sector *	63 Neutral	$4.21B	11.55	5.28%	250.72%	4.13%	-9.42%
CVLG	60 Neutral	$528.46M	14.36	8.95%	1.18%	0.59%	-11.10%
ULH	60 Neutral	$589.24M	7.07	13.57%	1.93%	1.16%	-30.78%
MRTN	57 Neutral	$1.04B	48.49	2.83%	1.87%	-13.47%	-62.49%
WERN	50 Neutral	$1.54B	87.28	1.21%	2.27%	-7.66%	―
HTLD	46 Neutral	$578.76M	―	-3.52%	1.05%	-13.25%	-301.55%

Covenant Logistics Group Corporate Events

Covenant Logistics Group Announces $50 Million Stock Buyback

Covenant Logistics Group announced a series of strategic initiatives aimed at enhancing operational efficiency and shareholder value. On April 23, 2025, the company approved a $50 million stock repurchase program, reflecting confidence in its future prospects. Additionally, the company’s leadership, including CEO David R. Parker and President M. Paul Bunn, will take voluntary salary reductions starting May 1, 2025, as part of efforts to improve margins. The first quarter of 2025 saw a decrease in adjusted earnings per share due to adverse weather and avian influenza, but Covenant remains optimistic about future growth, driven by modest rate increases and a recent acquisition expected to boost equipment utilization.

Spark’s Take on CVLG Stock

According to Spark, TipRanks’ AI Analyst, CVLG is a Neutral.

Covenant Logistics Group’s overall stock score reflects a mixed performance. The company’s financials show stable revenue but declining net margins, and while debt management has improved, equity growth remains a challenge. Technical analysis indicates bearish trends, which could deter investors. Valuation is moderate, suggesting a fair price, and the earnings call shows optimism for future growth despite recent challenges. Therefore, while there is potential for improvement, significant caution is advised given the current market and financial conditions.

To see Spark’s full report on CVLG stock, click here.