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Covenant Logistics Group (CVLG)
NYSE:CVLG

Covenant Logistics Group (CVLG) AI Stock Analysis

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Covenant Logistics Group

(NYSE:CVLG)

Rating:68Neutral
Price Target:
$28.00
▲(8.82%Upside)
Covenant Logistics Group's overall stock score reflects its stable financial performance and proactive corporate events, such as the stock buyback program. However, technical indicators suggest caution due to overbought conditions, and valuation metrics point to potential overvaluation. The mixed results from the earnings call further balance the outlook, indicating both opportunities and challenges ahead.
Positive Factors
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 is walking away from some business.
Weather Impact
Severe weather hit margins by approximately 3 points, below forecast.

Covenant Logistics Group (CVLG) vs. SPDR S&P 500 ETF (SPY)

Covenant Logistics Group Business Overview & Revenue Model

Company DescriptionCovenant Logistics Group (CVLG) is a leading provider of transportation and logistics services in North America. The company operates across multiple sectors, including expedited, dedicated, and managed freight transportation. With a commitment to delivering comprehensive supply chain solutions, Covenant Logistics offers services such as truckload, less-than-truckload, and intermodal transportation, as well as warehousing and freight brokerage.
How the Company Makes MoneyCovenant 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 Earnings Call Summary

Earnings Call Date:Apr 23, 2025
(Q1-2025)
|
% Change Since: 37.30%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mix of both positive and negative aspects. While there was notable growth in the Dedicated and Managed Freight segments, and TEL's performance was strong, the company faced significant challenges with revenue declines, reduced operating income, and impacts from weather and avian influenza. The balance of these factors suggests a mixed outlook.
Q1-2025 Updates
Positive Updates
Dedicated Segment Growth
Dedicated experienced average fleet growth in the first quarter of 212 units or approximately 16.7% and grew freight revenue by $9.5 million or 13.1% compared with the 2024 quarter.
Managed Freight Profitability Exceeds Expectations
Managed freight exceeded profitability expectations for the quarter by focused execution on profitable freight, assisting the expedited fleet with overflow capacity, and reducing insurance-related claims expense.
TEL Minority Investment Performance
TEL contributed pre-tax net income of $3.8 million for the quarter compared to $3.7 million in the prior year period. TEL's revenue increased by 25% year-over-year.
Improvement in Expedited Segment
The expedited segment yielded a 94.2 adjusted operating ratio, with improvement witnessed late in the period as operating conditions improved.
Negative Updates
Consolidated Freight Revenue Decline
Consolidated freight revenue declined by 1.8% or approximately $4.5 million to $243.2 million, primarily due to the managed freight segment generating $6 million less freight revenue.
Decrease in Adjusted Operating Income
Consolidated adjusted operating income shrank by 26.6% to $10.9 million, primarily due to adverse operating conditions that reduced utilization of revenue-producing equipment.
Warehouse Segment Profit Decline
The Warehouse segment saw a 6% decrease in freight revenue and a 42% decrease in adjusted operating profit compared to the prior year, due to facility cost increases and startup-related costs.
Weather and Avian Influenza Impact
Lower miles due to weather and avian influenza led to lower fixed cost coverage, higher layover costs, and worse equipment damage than a normal first quarter.
Company Guidance
During the Covenant Logistics Group Q1 2025 earnings call, guidance was provided on several key metrics and strategic directions. The company reported a 1.8% decline in consolidated freight revenue to $243.2 million, with managed freight revenue decreasing by $6 million, though this segment improved its adjusted operating income by $0.8 million. Consolidated adjusted operating income dropped by 26.6% to $10.9 million, largely due to adverse operating conditions. The adjusted leverage ratio was approximately 1.55 times, with a debt-to-capital ratio of 33.7%. The expedited segment saw a 5.3% reduction in average fleet size to 852 tractors, while the dedicated fleet grew by 16.7% or 212 units, increasing freight revenue by $9.5 million. Despite challenges from avian influenza and weather, the company plans to focus on improving margins through rate increases, exiting less profitable business, and expanding its specialized dedicated services. Covenant also noted a 6% decrease in warehouse segment revenue, with a 42% drop in adjusted operating profit, but expects improvements throughout the year. The company remains optimistic about its strategy and anticipates better operational conditions in the coming quarters.

Covenant Logistics Group Financial Statement Overview

Summary
Covenant Logistics Group presents a stable but cautious financial outlook. The income statement shows efforts toward efficiency, though profitability remains modest. The balance sheet is strong with manageable debt levels and a solid equity base. However, cash flow challenges due to capital expenditures could impact liquidity if not managed carefully. Overall, the company displays stability with areas for improvement in profitability and cash management.
Income Statement
70
Positive
The income statement shows mixed results. The TTM gross profit margin is approximately 15.0%, indicating reasonable cost management. However, the net profit margin stands at 3.4%, reflecting modest net profitability. Revenue growth is inconsistent, with a decline from 2022 to 2023, but a small recovery in 2024. EBIT and EBITDA margins have improved slightly in the recent TTM, reflecting operational efficiency.
Balance Sheet
75
Positive
The balance sheet indicates a stable financial position with a debt-to-equity ratio of 0.63 in the TTM, suggesting manageable leverage. The return on equity is around 8.7%, which is moderate. The equity ratio of 45.3% in the TTM points to a solid equity base, supporting financial stability.
Cash Flow
65
Positive
The cash flow statement highlights challenges with free cash flow, which is negative in the TTM. The operating cash flow to net income ratio is favorable at 3.3, indicating strong cash generation relative to profits. However, free cash flow to net income is negative, reflecting high capital expenditures impacting liquidity.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.12B1.13B1.10B1.22B1.05B838.56M
Gross Profit168.37M189.65M164.20M185.99M147.28M109.55M
EBITDA146.82M146.00M150.15M105.55M78.14M55.40M
Net Income38.51M35.92M55.23M108.68M60.73M-14.12M
Balance Sheet
Total Assets979.97M997.57M954.44M796.64M651.66M676.72M
Cash, Cash Equivalents and Short-Term Investments11.24M35.62M2.29M68.67M8.41M8.41M
Total Debt278.17M296.89M293.46M179.63M74.25M111.59M
Total Liabilities536.33M559.23M551.02M419.52M301.96M386.07M
Stockholders Equity443.64M438.34M403.42M377.13M349.70M290.64M
Cash Flow
Free Cash Flow-12.00M-30.07M-132.77M58.76M37.93M-31.01M
Operating Cash Flow126.02M122.89M84.84M159.23M73.22M63.04M
Investing Cash Flow-88.27M-107.67M-235.92M-86.21M10.34M138.05M
Financing Cash Flow-29.46M18.11M84.71M-12.77M-83.56M-236.27M

Covenant Logistics Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price25.73
Price Trends
50DMA
22.32
Positive
100DMA
22.67
Positive
200DMA
24.95
Positive
Market Momentum
MACD
0.66
Negative
RSI
74.92
Negative
STOCH
83.23
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CVLG, the sentiment is Positive. The current price of 25.73 is above the 20-day moving average (MA) of 23.47, above the 50-day MA of 22.32, and above the 200-day MA of 24.95, indicating a bullish trend. The MACD of 0.66 indicates Negative momentum. The RSI at 74.92 is Negative, neither overbought nor oversold. The STOCH value of 83.23 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CVLG.

Covenant Logistics Group Risk Analysis

Covenant Logistics Group disclosed 42 risk factors in its most recent earnings report. Covenant Logistics Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Covenant Logistics Group Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
ULULH
70
Outperform
$744.97M8.9313.57%1.48%1.16%-30.78%
69
Neutral
$1.93B11.1514.25%0.57%-5.69%51.78%
68
Neutral
£2.95B10.288.40%3.21%2.87%-9.95%
68
Neutral
$683.28M18.578.95%1.09%0.59%-11.10%
66
Neutral
$1.11B51.452.83%1.76%-13.47%-62.49%
61
Neutral
$1.80B102.071.21%1.91%-7.66%-78.26%
54
Neutral
$712.48M-3.44%0.88%-13.10%-121.50%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CVLG
Covenant Logistics Group
25.73
1.79
7.48%
HTLD
Heartland Express
9.13
-2.97
-24.55%
MRTN
Marten Transport
13.65
-3.77
-21.64%
WERN
Werner Enterprises
29.07
-5.35
-15.54%
ARCB
ArcBest
83.03
-24.79
-22.99%
ULH
Universal Logistics
28.78
-9.74
-25.29%

Covenant Logistics Group Corporate Events

Shareholder MeetingsDividends
Covenant Logistics Group Holds Annual Stockholders Meeting
Neutral
May 16, 2025

On May 14, 2025, Covenant Logistics Group held its Annual Meeting of Stockholders, where four proposals were voted on, including the election of directors, approval of executive compensation, ratification of Grant Thornton LLP as the independent accounting firm, and an amendment to increase authorized shares. The board also declared a quarterly cash dividend of $0.07 per share for Class A and B common stock, payable on June 27, 2025, to stockholders of record on June 6, 2025, as part of a previously approved dividend program.

The most recent analyst rating on (CVLG) stock is a Buy with a $34.00 price target. To see the full list of analyst forecasts on Covenant Logistics Group stock, see the CVLG Stock Forecast page.

Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Covenant Logistics Group Announces $50 Million Stock Buyback
Positive
Apr 23, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 02, 2025