Saia: Initiating Coverage With $230 Fair Value Estimate; Valuation Sets High bar for Execution

Saia ranks among the 10 largest less-than-truckload, or LTL, carriers and is a strong operator in terms of profitability. Pure-play public competitors of similar quality include XPO and best-in-class Old Dominion. Saia was historically a super-regional carrier, but in 2017 it started expanding into the Northeast, while more recently boosting door capacity in existing regions with attractive long-term growth prospects. Saia has bolstered its margin profile in recent years with help from disciplined yield management, improved business mix (higher margin, heavier weighted freight), and rising lane density in recently expanded regions. Also, in our view, Saia's heavy terminal investment has positioned it well to take market share once the trucking landscape works through its current normalization/pullback phase.