The four major trucking companies in Arkansas posted the best third-quarter stock performances compared with the rest of the state's publicly traded businesses.
Fort Smith-based ArcBest led the way with a 62.4 percent return in the third quarter, followed by USA Truck, up 62.2 percent; and P.A.M. Transportation Services, which rose 26.3 percent.
J.B. Hunt Transport Services of Lowell climbed 21.6 percent for the quarter.
It's not just Arkansas truckers doing well, said Bob Williams, senior vice president and managing director of Simmons First Investment Group Inc. in Little Rock.
"The entire trucking sector is in good favor," Williams said.
ArcBest, a less-than-truckload carrier, benefited from disciplined pricing strategies while its truckload competitors suffered more from excess capacity, Williams said.
"That said, even the most efficient firms fight and struggle to establish a competitive advantage as they wrestle with labor and regulatory costs," Williams said.
With the addition of the logistics division, ArcBest now has multiple lines of business to service, Williams said.
Investors of Van Buren-based USA Truck ignored the quarterly loss report in the second quarter after the new management team projected a third-quarter positive operating income, Williams said.
"Management adjusted regional staffing operations as they focused on controlling expenses and increasing productivity," Williams said. "The logistics arm results have improved but market dynamics have limited price increases as excess capacity is still being absorbed."
P.A.M., based in Tontitown, had a tough second quarter, Williams said.
"As the firm tried to diversify outside of the automotive transport sector, excess capacity negatively impacted the redeployment of those assets," Williams said.
The inability to rapidly divert that equipment as demand waned led to substantial asset underutilization, he said.
"Despite this, P.A.M.'s shares performed well," Williams said.
Windstream Holdings of Little Rock had the worst performance of the quarter, losing 54.4 percent.
Windstream investors were hurt by the complete elimination of the dividend, Williams said.
"The simultaneous announcement of a $90 million stock buyback has been unable to prop up the share price," Williams said. "Despite merging with Earthlink 11 months ago, investors seem concerned that the rural telecom sector is no longer relevant."
Uniti Group in Little Rock, a spinoff from Windstream, had the next worst decline in stock price for the quarter, falling almost 42 percent.
"Downgrades by several major investment firms served only to drive [Uniti's] shares lower," Williams said.
Also, S&P Global Ratings lowered Uniti's corporate credit rating to "B" from "B+," unnerving some investors, Williams said.
"The negative outlook reflects continued uncertainty around Windstream's future performance, which could jeopardize Uniti's operating performance, given that the vast majority of its cash flow is derived from Windstream's lease payment," he said.
That seemed to be beyond the risk threshold of many investors, Williams said.
Murphy USA had the third-lowest stock performance of the quarter. The shares fell 6.9 percent.
The El Dorado company's shares took a hit late in the quarter as concerned investors sold in fear that sales at its stores were slowed by this year's hurricanes, Williams said.
Arkansas' four publicly traded banks generally performed well in the third quarter.
Simmons First National Corp. was up 9.5 percent for the quarter, followed by Bear State Financial, up 8.5 percent; Bank of the Ozarks, up 2.5 percent; and Home BancShares, up 1.3 percent.
Arkansas' publicly traded banks are holding their own, said Garland Binns, a Little Rock banking attorney.
"It's not surprising that there would be a lull in the market," Binns said. "There's a lot of things happening on the national front."
Binns noted efforts to repeal the Patient Protection and Affordable Care Act, a newly released tax package that could include a cut in corporate taxes and possible regulatory relief for banks.
"The marketplace is just taking a watch-and-see attitude," Binns said.
Thirteen Arkansas stocks rose in the third quarter and five fell.
For the first nine months of the year, the Arkansas Index, an index of the 18 largest publicly traded companies in the state, is up 2.1 percent. The index was in negative territory for most of the year before rallying in the past week.
Business on 09/30/2017