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Covenant Logistics Group (CVLG)
NYSE:CVLG
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Covenant Logistics Group
(NYSE:CVLG)
Rating:69Neutral
Price Target:
$27.00
▲(12.83% Upside)
Positive Factors
Earnings
CVLG's strong 2Q performance exceeded forecasts, driven by steady business operations and better-than-expected TEL estimates.
Revenue Growth
CVLG's freight revenues rose 8% year-over-year, surpassing estimates.
Share Buybacks
The announcement of CVLG's share buybacks is a positive signal, given the current valuation.
Negative Factors
Competitive Pressure
Increasing competitive pressure in the dedicated segment is hindering growth as CVLG opts out of some business opportunities.
Operational Efficiency
The expedited OR of 93.9% did not meet the estimate, and the top line was slightly below expectations.
Weather Impact
Severe weather affected Q1 margins by approximately 3 points, leading to a 98.1% margin, which was below forecasts.
Covenant Logistics Group (CVLG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$602.47M
Dividend Yield1.1%
Average Volume (3M)86.96K
Price to Earnings (P/E)18.4
Beta (1Y)1.28
Revenue Growth0.75%
EPS Growth-15.76%
CountryUS
Employees3,100
SectorIndustrials
Sector Strength74
IndustryTrucking
Share Statistics
EPS (TTM)0.45
Shares Outstanding20,319,618
10 Day Avg. Volume66,673
30 Day Avg. Volume86,960
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.60
Enterprise Value/Revenue0.85
Enterprise Value/Gross Profit5.29
Enterprise Value/Ebitda6.57
Forecast
1Y Price Target
$28.50Price Target Upside19.10% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Covenant Logistics Group Business Overview & Revenue Model
Company DescriptionCovenant 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 MoneyCovenant Logistics Group generates revenue primarily through its transportation services, which include truckload and dedicated freight services. The company earns money by charging customers for the movement of goods, utilizing its fleet of trucks and drivers. Key revenue streams include spot market freight, contracted freight services, and logistics management services. Additionally, CVLG benefits from strategic partnerships with various shippers and suppliers, which enhance its service offerings and improve operational efficiency. The company may also leverage technology and data analytics to optimize routes and reduce costs, further contributing to its earnings.
Covenant Logistics Group Earnings Call Summary
Earnings Call Date:Jul 23, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 16, 2025
Earnings Call Sentiment Neutral
The earnings call revealed a mixed performance with record-breaking revenue and significant growth in the dedicated fleet and Managed Freight segment. However, these were balanced by challenges in margin compression, increased debt levels, and underperformance in certain segments, such as Warehouse and Expedited.Q2-2025 Updates
Positive Updates
Record-Breaking Revenue
Revenue rebounded to a new record high in Q2 2025, reaching $276.5 million, a 7.8% increase year-over-year, driven by growth in the dedicated fleet and strong new business in Managed Freight.
Share Repurchase Program
Covenant Logistics repurchased approximately 1.6 million shares, reducing the average diluted shares outstanding by 5.7% for a total cost of $35.2 million.
Managed Freight Segment Exceeds Expectations
Managed Freight exceeded both revenue and profitability expectations, benefiting from nonrecurring business and handling overflow freight from Expedited.
Growth in Dedicated Fleet
The dedicated fleet grew by 162 tractors year-over-year, a 11.7% increase, and freight revenue grew by $8.3 million or 10.2%.
TEL Investment Performance
TEL's revenue increased by 34% compared to the prior year, contributing $4.3 million of pretax net income in the quarter.
Negative Updates
Margin Compression in Truckload Segment
Consolidated adjusted operating income shrank by 19.6% year-over-year to $15 million due to inflationary costs and high claims expenses.
Increased Debt Levels
Net indebtedness increased by $49 million to $268.7 million as of June 30, 2025, due to share repurchases and acquisition-related payments.
Warehouse Segment Profit Decline
Warehouse segment's adjusted operating profit fell by approximately 45%, primarily due to facility-related cost increases and startup inefficiencies.
Expedited Segment Challenges
The Expedited segment's adjusted operating ratio was 93.9%, showing only slight improvement, and the average fleet size shrunk by 50 units year-over-year.
Pressure on Dedicated Segment Margins
Despite an increase in fleet size, the Dedicated segment's adjusted operating ratio remained high at 95%, falling short of long-term expectations.
Company Guidance
During the Covenant Logistics Group's Q2 2025 earnings call, the company reported a record high revenue of $276.5 million, marking a 7.8% increase or approximately $20 million over the previous year. Despite the revenue growth, the consolidated adjusted operating income decreased by 19.6% to $15 million due to rising costs in the Truckload segment. The company's share repurchase program led to the buyback of 1.6 million shares at an average price of $22.69, costing $35.2 million, with $13.8 million remaining in their $50 million share repurchase authorization. The net indebtedness increased by $49 million to $268.7 million, resulting in an adjusted leverage ratio of approximately 2x and a debt-to-capital ratio of 39.2%. The Expedited segment reported a 93.9% adjusted operating ratio, slightly improved from the previous year, while the Dedicated segment saw a fleet growth of 162 tractors, increasing freight revenue by $8.3 million or 10.2% year-over-year. Managed Freight exceeded revenue and profitability expectations, although it was noted that this segment is subject to volatility. The Warehouse segment's adjusted operating profit fell by 45% despite flat freight revenue, attributed to increased facility-related costs and inefficiencies in new business start-ups. The company's minority investment in TEL contributed $4.3 million in pretax net income. Looking forward, Covenant Logistics anticipates a slowly improving general freight market, with potential for better results in the latter half of the year due to seasonality and strategic shifts towards specialized segments.Covenant Logistics Group Financial Statement Overview
Summary
Covenant Logistics Group shows stable financials with a strong balance sheet and moderate profitability. However, cash flow challenges due to high capital expenditures impact liquidity.Income Statement
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.70
Positive
Balance Sheet
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.75
Positive
Cash Flow
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.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.14B | 1.13B | 1.10B | 1.22B | 1.05B | 838.56M |
| Gross Profit | 182.66M | 189.65M | 164.20M | 185.99M | 147.28M | 109.55M |
| EBITDA | 147.23M | 146.00M | 150.15M | 137.87M | 117.24M | 70.32M |
| Net Income | 36.16M | 35.92M | 55.23M | 108.68M | 60.73M | -42.72M |
Balance Sheet | ||||||
| Total Assets | 1.01B | 997.57M | 954.44M | 796.64M | 651.66M | 676.72M |
| Cash, Cash Equivalents and Short-Term Investments | 268.69M | 35.62M | 2.29M | 68.67M | 8.41M | 8.41M |
| Total Debt | 310.54M | 296.89M | 293.46M | 179.63M | 74.25M | 111.59M |
| Total Liabilities | 592.22M | 559.23M | 551.02M | 419.52M | 301.96M | 386.07M |
| Stockholders Equity | 416.87M | 438.34M | 403.42M | 377.13M | 349.70M | 290.64M |
Cash Flow | ||||||
| Free Cash Flow | 1.60M | -30.07M | -132.77M | 58.76M | 37.93M | -31.01M |
| Operating Cash Flow | 125.53M | 122.89M | 84.84M | 159.23M | 73.22M | 63.04M |
| Investing Cash Flow | -74.73M | -107.67M | -235.92M | -86.21M | 10.34M | 138.05M |
| Financing Cash Flow | -51.94M | 18.11M | 84.71M | -12.77M | -83.56M | -236.27M |
Covenant Logistics Group Technical Analysis
Neutral
23.93
Price Trends
24.29
Negative
22.97
Positive
24.42
Negative
Market Momentum
-0.01
Positive
48.95
Neutral
25.90
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 23.93 is below the 20-day moving average (MA) of 23.94, below the 50-day MA of 24.29, and below the 200-day MA of 24.42, indicating a bearish trend. The MACD of -0.01 indicates Positive momentum. The RSI at 48.95 is Neutral, neither overbought nor oversold. The STOCH value of 25.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $1.69B | 10.78 | 12.50% | 0.63% | -6.42% | 25.72% | |
69 Neutral | $602.47M | 18.43 | 8.58% | 1.10% | 0.75% | -15.76% | |
66 Neutral | $661.93M | 10.85 | 9.67% | 1.64% | -5.55% | -52.21% | |
64 Neutral | $1.72B | 33.24 | 3.65% | 1.96% | -6.43% | -13.76% | |
64 Neutral | $10.73B | 15.74 | 7.56% | 2.01% | 2.76% | -15.10% | |
56 Neutral | $958.68M | 45.83 | 2.72% | 2.04% | -11.77% | -52.06% | |
49 Neutral | $664.16M | ― | -4.42% | 0.93% | -16.42% | -49.44% |
* Industrials Sector Average
Performance Comparison
CVLG
Covenant Logistics Group
23.93
-1.43
-5.64%
HTLD
Heartland Express
8.61
-3.05
-26.16%
MRTN
Marten Transport
11.74
-5.01
-29.91%
WERN
Werner Enterprises
28.61
-7.04
-19.75%
ARCB
ArcBest
75.70
-22.90
-23.23%
ULH
Universal Logistics
25.55
-13.45
-34.49%
Covenant Logistics Group Corporate Events
Executive/Board ChangesDividends
Covenant Logistics Announces New Accounting Officer
Neutral
Aug 15, 2025
On August 11, 2025, Matisse Long resigned as the Chief Accounting Officer of Covenant Logistics Group, Inc., and the Board of Directors appointed James ‘Tripp’ S. Grant as the new principal accounting officer, effective immediately. Additionally, on August 12, 2025, the Board declared a quarterly cash dividend of $0.07 per share for Class A and Class B common stock, payable on September 26, 2025, to stockholders of record as of September 5, 2025, continuing a previously approved dividend program.
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.