FedEx Freight on Thursday night took a positive step forward in its young journey as a standalone public company. In its first official earnings report since being spun off in June, the less-than-truckload shipping provider delivered a top and bottom line beat and offered encouraging commentary on its self-help improvements. Revenue in the three months ended in September rose 8% to $2.44 billion, beating the LSEG consensus of $2.33 billion. Adjusted earnings per share (EPS) totaled $1.49, exceeding the consensus of $1.36, LSEG data showed. Bottom line Shares rose about 3% in extended trading, a welcome market reaction considering how badly the stock has struggled. After a decent debut in June, FedEx Freight has been drifting lower, seemingly with no end. Anytime a stock is spun off, there can be an adjustment period as investors who received shares due to ownership in its former parent decide to dump it. Plus, elevated fuel prices have weighed on stocks across the transportation industry, complicating matters for FDXF shares. As a reminder, FedEx Freight is a less-than-truckload carrier. LTL services consolidate shipments from multiple customers onto a single trailer. Think of these shipments as too large for standard parcel delivery, such as something over 150 pounds or a few pallets of product, but not big enough for the customer to need a whole truck. Its competitors include Old Dominion Freight Line , XPO and J.B. Hunt . FDXF ALL mountain FedEx Freight’s stock performance since its June debut. Though it hasn’t been fun to endure this drawdown in FDXF, we haven’t bailed on the name because our investment thesis centers on FedEx Freight making operational improvements now that it’s no longer part of FedEx Corp . We recognized that it cannot be accomplished overnight. That’s what made Thursday’s earnings report such an anticipated event — a chance to update investors on its progress and show what’s in store for next year. Aside from an August investor conference, we haven’t heard from Freight management since late June, when the company discussed the results of its final quarter inside FedEx. For example, Freight believes it has more leverage in pricing negotiations as a standalone company than it did under FedEx, where contracts were bundled with package delivery and other transportation services. “Since June 1, we have successfully renewed approximately 25% of our contractual portfolio and achieved our strongest renewal pricing performance in recent years,” FedEx Freight CEO John Smith said Thursday night. “Given that approximately two-thirds of our revenue is generated under negotiated customer pricing agreements, we believe our contractual renewal performance provides meaningful support for future yield improvement.” Another benefit of being on its own: FedEx Freight has built up a dedicated salesforce focused on the less-than-truckload market, where the company is pursuing winning more business in attractive industries. “When you…
Read More: FedEx Freight delivers a much-needed quarterly beat. Where we stand on