ARCBEST CORPORATION (ARCB): what the price assumes

In the published model solve dated 2026-Q2, anchored at $141.12, ARCBEST CORPORATION (ARCB) is priced for today's economics sustained for ~8.4 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/ARCB

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 11.6% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: n/a

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.6%); the inversion above states its own rate.

Per-Model Detail (n=12)

Solvency

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 3.4%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Two businesses sit inside one ticker: an Asset-Based trucking operation carrying 68% of revenue, whose segment revenues the 10-K puts at $2.7 billion for the year ended 2025, and an Asset-Light logistics arm that primarily provides logistics services through the use of third-party vendors.
• Trailing operating margin is 2.5%, against 24.6% at ODFL and 10.7% at SAIA, and whether that gap is cyclical or structural is the entire investment question.
• Management has guided to a 400 to 500 basis point improvement in the Asset-Based operating ratio for the June 2026 quarter, which is the nearest test of the cost work now under way.

Bull Case

The market here is paying for a recovery that has not arrived, and the useful question is whether the machinery to deliver it has already been built. Some of it clearly has. Operational efficiency work, including continuous improvement training and AI-assisted city route optimisation, has produced 47 million dollars of combined annualised cost savings, and management has guided to a 400 to 500 basis point improvement in the Asset-Based operating ratio for the June 2026 quarter. On a revenue base above four billion dollars, savings of that order are not decoration.

Volume has been going the right way while price has not. In the March 2026 quarter Asset-Based tonnage per day rose 6.5% and daily shipments rose 2%, with contract renewals averaging 6%, the strongest renewal pricing since 2022. The 10-K describes the same pattern through 2025, where the increase in daily shipments reflected the onboarding of new core LTL customers. Winning freight in a soft market and repricing it as contracts roll is the sequence a less-than-full-margin carrier needs, and it happens in that order.

The two-segment structure is worth more than it usually gets credit for. The Asset-Based operation owns terminals and equipment and carries the fixed cost that comes with them. The Asset-Light segment, per the 10-K, primarily provides logistics services through the use of third-party vendors and prices based on market conditions, lane characteristics, equipment type, and service requirements, including through contractual arrangements and spot rates. One consumes capital and generates operating leverage; the other consumes almost none and generates cash through a downturn. Owning both means the company does not have to choose which half of the freight market to be right about.

The balance sheet is genuinely modest for a capital-intensive carrier. Funded borrowings are about 223.7 million dollars against 86.4 million dollars of liquid assets on the funded-debt build, leaving roughly 137.2 million dollars net, which is about 1.35 times operating profit even at today's depressed earnings. That is close to nothing for a business with terminals and a fleet on it.

Capital has been going back to holders throughout. The share count is down 3.6% a year across the four years to March 2026. Buying stock through a freight downturn is a real statement, because it is the point in the cycle when the cash is scarcest and the temptation to hoard it is highest. Every point of operating margin the company recovers now lands on a smaller share count than it would have four years ago.

Bear Case

The freight cycle, not ArcBest, is writing these numbers, and it has not been writing kindly. The 10-K names the condition directly: Ongoing weakness in the manufacturing sector and evolving freight dynamics, including the shift of some heavier LTL shipments to the truckload market due to lower rates. When truckload rates fall far enough, heavy less-than-truckload freight simply leaves for the other mode. That is not a share loss a carrier can sell its way out of, and it compresses exactly the shipments that carry the best economics.

The margin gap against the cohort is the part that should give a holder pause. ArcBest earned a 2.5% operating margin over the trailing year. ODFL earned 24.6% and SAIA 10.7%, both of them direct competitors the 10-K names by name in the same paragraph as Old Dominion Freight Line, Inc.; Saia, Inc.. Against the truckload group the placement makes more sense, with KNX at 2.4%, SNDR at 2.8% and LSTR at 3.5%. That is the problem in a sentence: a company running an LTL network is earning truckload economics.

Part of the explanation is structural rather than cyclical, and the filing says so. ArcBest flags that ABF Freight's inability to reach agreement on future collective bargaining agreements, could result in labor inefficiencies, disruptions, stoppages, or delayed growth. Contractual wage and benefit increases under the 2023 national agreement flowed straight through the first quarter of 2026, pushing the Asset-Based operating ratio to 97.3%, some 140 basis points worse than a year earlier, even while tonnage rose. Costs that are set by contract do not wait for the freight market to recover. Meanwhile the 10-K notes depreciation and amortisation rose as a share of revenue in 2025 on service centre renovations and higher purchase prices for new revenue equipment.

Which makes what the shares assume difficult. Today's quote works out to roughly 37 times what the business earns at the operating line, and closing that requires operating profit compounding at its self-funding ceiling of 25% a year for close to 13 years. There is a second way to state the same demand, and it is no gentler. The operating margin the shares require is around 5.4%, better than double what the company earns now, reached and then sustained. Only about 14% of comparable fast-growers held that kind of pace even a decade, and every percentage point of shortfall adds roughly 2.2 years to the wait.

Nothing about the balance sheet forces the issue, which is genuinely to the company's credit and is also why the bear case is not a solvency case. It is simpler than that. Three of the four families of valuation method land well beneath today's quote, and the one that reaches it does so through an enterprise-multiple comparison against a sector reference rather than through anything the company currently earns. Buy the shares here and the recovery is not upside. It is the entry assumption.

Valuation

Trailing operating income of about 102 million dollars on a revenue base near 4.04 billion dollars is the fact every other number here has to accommodate. That is a 2.5% operating margin, and it is what a freight downturn does to a carrier with fixed terminal and equipment costs. Read the multiples against that base and they will all look strange, because the denominator is the thing that is depressed.

What today's quote embeds follows directly. Roughly 37 times what the business earns at the operating line, which requires operating profit to compound at its self-funding ceiling of 25% a year for close to 13 years. There is a second way to state the same demand, framed as profitability instead of time. The operating margin the quote requires is near 5.4%, reached and then held rather than touched in a single good year. The near-term pace is inside what ArcBest has delivered before; the demand is on how long it has to persist, and each percentage point of shortfall against the ceiling adds about 2.2 years.

The methods are lopsided in an informative way. Peer multiples are the only family that reaches the traded level, and the shares sit about 14% above where that family lands. The earnings-power approaches, the cash-flow approaches and the book-value approaches all land well beneath it. The book-value gap has a specific cause: stated book value is 57.59 dollars a share while the trailing return on equity is 4.3%, well under a cost of equity of 9.3%, so those models mark the book down rather than accept it. The exit-multiple construction holds today's enterprise multiple flat rather than expanding it and still falls short. When only the comparison-to-sector lens reaches a quote, the premium is being paid for reversion rather than for current earnings.

The cohort makes the same point with cleaner numbers. ODFL earned a 24.6% operating margin on a revenue base near 5.46 billion dollars, and SAIA 10.7% on 3.25 billion dollars, both of them named as competitors in ArcBest's own 10-K. On the truckload side of the comparison, KNX earned 2.4% on 7.50 billion dollars, SNDR 2.8% on 5.67 billion dollars and LSTR 3.5% on 4.76 billion dollars. ArcBest's 2.5% places it with the second group while it operates in the first, and the segment split explains part of that: the Asset-Based operation the 10-K sizes at $2.7 billion for the year ended 2025 carries the network cost, while the Asset-Light arm primarily provides logistics services through the use of third-party vendors at thinner but far less capital-hungry economics.

Solvency is the part of the file that asks for nothing. Funded borrowings near 223.7 million dollars against 86.4 million dollars of liquid assets leave roughly 137.2 million dollars net on the funded-debt build, about 1.35 times operating profit even against a trough earnings base, and the company is not burning cash. The share count has fallen 3.6% a year across the four years to March 2026. That combination means the recovery, if it comes, arrives without a financing event standing in front of it, and it lands on fewer shares than it would have before.

Catalysts

The March 2026 quarter, reported April 28, 2026, showed volume improving while cost ran ahead of it. Consolidated revenue was $998.8 million against $967.1 million a year earlier, and Asset-Based segment revenue was $655 million, up about 2% on a per-day basis. Asset-Based tonnage per day rose 6.5% and daily shipments rose 2%, with deferred contract renewals averaging 6%, the strongest renewal pricing since 2022. The Asset-Based operating ratio nonetheless deteriorated to 97.3%, roughly 140 basis points worse than the prior year, as contractual wage and benefit increases and higher equipment costs came through.

The nearest concrete test is the guidance attached to that print. Management projected a 400 to 500 basis point improvement in the Asset-Based operating ratio for the June 2026 quarter. A move of that size would be the largest single-quarter operating improvement the segment has produced in this cycle, and it is the specific number the next report either delivers or does not.

Two internal programmes sit behind it. Efficiency work spanning continuous improvement training and AI-assisted city route optimisation has generated 47 million dollars of combined annualised cost savings, and the company launched its ArcBest View platform in May 2026. Neither shows up as a line item. Both show up, if they work, in the operating ratio, which is where the whole thesis is settled.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• ODFL (OLD DOMINION FREIGHT LINE, INC.)
• FY2025 10-K: …was deregulated in 1980. The largest 5 and 10 LTL motor carriers accounted for approximately 56% and 81%, respectively, of the domestic LTL market in 2024 according to information reported in Transport Topics . We believe consolidation in our industry will continue due to increased customer demand for transportation…
• FY2025 10-K: …a "just-in-time" basis, which may increase our costs and adversely affect our ability to meet our customers' needs; • consolidation in the ground transportation industry may create other large carriers with greater financial resources to use in operations and other competitive advantages relating to their size; •…
• SAIA (Saia, Inc.)
• FY2025 10-K: …economic recessions or times of reduced growth rates in the economy, which may limit our ability to maintain or increase prices or grow our business; • Many customers reduce the number of carriers they use by selecting approved transportation service providers, periodically accepting bids from multiple carriers for…
• FY2025 10-K: …have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. These conditions include recessionary economic cycles and downturns in customer business cycles, labor and supply shortages, global uncertainty and instability, inflation, changes in U.S. social, political, and…
• JBHT (J.B. HUNT TRANSPORT SERVICES, INC.)
• FY2025 10-K: 7.1 years. We perform routine servicing and preventive maintenance on our equipment at our regional terminal facilities. Competition and the Industry The freight transportation markets in which we operate are frequently referred to as highly fragmented and competitive. Our JBI segment competes with other intermodal…
• FY2025 10-K: …our growth and profitability. In addition, our growth could be limited by an inability to attract third-party carriers upon whom we rely to provide transportation services. We operate in a competitive and highly fragmented industry. Numerous factors could impair our ability to maintain our current profitability and…
• KNX (Knight-Swift Transportation Holdings Inc.)
• FY2025 10-K: …Logistics gross margin (revenue, excluding intersegment transactions, less purchased transportation expense, excluding intersegment transactions) as a percentage of logistics revenue, excluding intersegment transactions Average Containers Intermodal Average containers in operation during the period GAAP Operating…
• FY2025 10-K: …capacity. By late 2022, inflationary pressures across equipment, fuel, labor, maintenance, and insurance began to weigh more heavily on industry cost structures as demand patterns started to shift. 2023 - 2025 Beginning in 2023, the freight market entered a prolonged downcycle characterized by moderated consumer…
• SNDR (Schneider National, Inc.)
• FY2025 10-K: …7 Table of Contents We operate in a highly competitive and fragmented industry that is characterized by intense price competition which could have a materially adverse effect on our results of operations. Our operating segments compete with many other truckload carriers, logistics, brokerage, and transportation…
• FY2025 10-K: …competitive, scalable capacity. In 2025, we implemented stricter qualification requirements for certain third-party carriers in response to cargo theft concerns, which reduced the number of carriers in our network and influenced volume and mix within the period. Logistics also plays a role in innovation, including…
• WERN (WERNER ENTERPRISES, INC.)
• FY2025 10-K: …to reduce our exposure to fuel price fluctuations. We operate in a highly competitive industry, which may limit growth opportunities and reduce profitability. The freight transportation industry is highly competitive and includes thousands of trucking and non-asset-based logistics companies. We compete primarily with…
• FY2025 10-K: …claims; and associate health claims (supplemented by premium-based insurance coverage above certain dollar levels). For that reason, our financial results may also be affected by driver safety, medical costs, weather, legal and regulatory environments and insurance coverage costs to protect against catastrophic…
• LSTR (LANDSTAR SYSTEM, INC.)
• FY2025 10-K: …which the Company operates, could cause reduced demand for the Company's services and a reduction in the volume of shipments transported by the Company's network, and could have a material adverse effect on Landstar's results of operations. Substantial industry competition. As noted above in Item 1, "Business -…
• FY2025 10-K: …400%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million. Moreover, the Company from year to year manages the level of its financial exposure to commercial trucking claims in excess of $10 million, including…
• ZTO (ZTO Express (Cayman) Inc.)
• FY2025 20-F: …fleets, as well as technology infrastructure and people, particularly talent in overall management, business operation and information technology. We expect our continued investments to further improve our parcel handling capacity, increase market penetration, and enhance customer services and operational efficiency.…
• FY2025 20-F: …those set forth under "Item 3. Key Information-D. Risk Factors" or in other parts of this annual report on Form 20-F. A. Operating Results General Factors Affecting Our Results of Operations Demand from China e-commerce industry for express delivery services We have benefited from the rapid growth of China's…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.