Matt Young: We recently initiated coverage on newly public multimodal transportation and logistics provider Schneider National, which held its IPO in April at $19 per share. The stock is currently trading at about $20, not far off our $21 fair value estimate.
We did not award an economic moat to Schneider overall because of its flagship truckload shipping unit, which operates in a highly commoditized marketplace. That said, investors should note that Schneider is a high-quality transport, and its intermodal and asset-light logistics segments do show signs of having a narrow moat.
Before its IPO, Schneider was a quiet firm in terms of public disclosure surrounding its intermodal and truck brokerage operations. And what surprised us most here is the magnitude and profitability of those divisions, both of which show signs of benefiting from the self-reinforcing network effect.
Intermodal and brokerage make up about a third of revenue, and Schneider is the third largest asset-light intermodal provider by container count following leader JB Hunt, then Hub Group, though we estimate it's the second most profitable.
Wrapping up with valuation, Schneider is a top-tier transportation and logistics name, and although the stock isn't cheap at the moment, it’s not expensive either, and we think it could actually outperform several other transports, especially many truckload stocks, currently trading in overvalued territory.