In This Article:
We came across a bullish thesis on Heartland Express, Inc. (HTLD) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on HTLD. Heartland Express, Inc. (HTLD)'s share was trading at $8.44 as of April 14th. HTLD’s forward P/E was 833.33 according to Yahoo Finance.
A fleet of delivery trucks driving down a highway, delivering specialized chemicals to customers.
Heartland Express (HTLD) presented at the JP Morgan Industrials Conference on March 14th, offering insight into Q1 2025 trends ahead of its earnings release. Despite a tough three-year freight recession, CEO Mike Gerdin signaled optimism, calling this “the best trucking has felt in three years.” Load rejections, a proxy for market strength, rose meaningfully—from 100 per week early in 2024 to 1,100 per week by March, suggesting a firming freight environment. During the 2021 boom, HTLD was rejecting 9,000 loads weekly, while a normalized level is around 5,000. The rebound in rejections, coupled with improving customer sentiment, points to a gradually healing freight market. HTLD posted a GAAP net loss of $1.9 million in Q4 2024, a sharp improvement from the $9.2 million loss in Q3. While Q1 2025 results may still show weakness—comparable to the $15 million net loss in Q1 2024 due to severe weather across the sunbelt—March marked a turning point. CEO Gerdin confirmed March was significantly better than January and February, hinting at a potential return to net income in Q2 2025. If so, the Q1 earnings release could trigger a final flush from algorithmic traders, with 60% of market participants now operating on programmatic signals. This could create a compelling buy-the-dip setup for value investors.
HTLD maintains a disciplined capital strategy, keeping its fleet young with an average tractor age of 2.5 years, up from 1.8 in 2019. Trailer age has climbed from 3.6 years to 7.4 due to acquisitions, but the company is waiting for a better pricing environment before selling its surplus. Emissions standards set to take effect in January 2027 are expected to raise truck prices by 15–20%, with possible tariffs adding another 5–15% on top. Still, Gerdin sees tariffs as less impactful than emissions rules, and capex should remain stable outside those events. Despite losses, HTLD has paid down $295 million of debt since 2022, reducing its long-term debt to just $193 million. At the current pace, it will be debt-free within two years. That would unlock over $100 million annually in additional free cash flow, increasing margins by 15 percentage points. Today, HTLD trades at just 0.63x sales—well below its historical 2.0x average. A return to $1.2 billion in revenue (2023 levels) and a normalized multiple would imply a $30.56 share price by 2027. Even absent full recovery, a flip to GAAP profitability could catalyze a sharp re-rating. HTLD’s acquisition strategy remains opaque, as CFI and Smith Transport are still reported separately, leaving the door open for future monetization or integration.