WERNER ENTERPRISES, INC. (WERN): what the price requires

At today's price, WERNER ENTERPRISES, INC. (WERN) is priced for -3.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/WERN

Headline

FieldValue
TickerWERN
CompanyWERNER ENTERPRISES, INC.
Current price$44.43/sh
CompositionTruckload Transportation Services (TTS) 70% / Werner Logistics 30%

What The Price Requires (Inversion)

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

FieldValue
Inversion basiswhole-company
Operating margin needed3.4%
Operating margin (mid-cycle)7.4%
Margin compression implied-4.0pp
Trailing margin (depressed year)1.7%
Implied growth-3.0%
Multiple paid16x mid-cycle operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.9pp.

Reconcile: at the x-ray's 9.3% required return this reads ~9.6%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.06σ
cohort percentile (of 225 peers)28
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

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.

FamilyMedian price/FVModelsReads
Asset2.08x2expensive
Earnings2.56x1expensive
Relative0.43x2justifies
Growth0.92x2justifies

Families that justify the price: Relative, 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 7.0%); the inversion above states its own rate.

Per-Model Detail (n=7)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$94.440.47xyesReference only (OCF-based, capex excluded): OCF $0.2B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$102.520.43xyesP/S fallback (negative EPS): Sector P/S 2.0x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$22.581.97xyesReference only (book value floor): BV/sh $22.58, ROE negative
Two-Stage Excess ReturnAsset$20.322.19xyesReference only (book value with convergence): BV/sh $22.58, ROE converges to ke
Discounted Future Market CapGrowth$32.231.38xyesRev $3.1B, growth 3% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.9x / 1.0x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$17.342.56xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.17B × (1−21%) / WACC 7.0% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$0.014443.00xyesEBITDA $0.02B × sector EV/EBITDA 13.0x (excluded from median)
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$0.4598.73xyesBV $22.58 × (ROIC 0.1% / WACC 7.0%) (excluded from median)
P/Sales SectorRelative$102.520.43xyesRevenue $3.07B × sector P/S 2.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$870.2m
Net debt / NOPAT (after-tax)4.86x
Net debt / operating income (pre-tax)3.84x
Interest coverage5.6x
Share count CAGR (buyback)-2.3%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 7.4%); the trailing year was depressed.

Bullet Takeaways

Bull Case

The surprising thing in Werner's first quarter is not the headline; it is the margin sitting under it. The company earned an adjusted operating margin of just 1.5%, a number that would look like distress in almost any other industry. For a truckload carrier in the third year of a freight recession, it is a sign of life: operating income swung to a positive $11.9 million from a loss a year earlier, an improvement of 180 basis points. The reason that matters is operating leverage. A trucking company at trough margins has enormous earnings upside when rates normalize, because the cost base is largely fixed and incremental rate gains fall almost entirely to the bottom line. The current 1.5% is not the steady state; it is the bottom of a cycle.

The revenue line shows Werner is not waiting passively for the cycle. Revenue grew 14% to $808.6 million, with Truckload Transportation Services up 18% to $594 million, helped by the FirstFleet acquisition and growth in the dedicated fleet. Dedicated freight is the stickier, more stable end of trucking, where the carrier serves a specific customer's lanes under contract, and Werner reported a 95% customer retention rate. The company has been deliberately reshaping toward that stability while shrinking its more volatile one-way fleet, ending 2025 with 7,100 tractors in the segment after a restructuring. It also focuses its truckload business on consumer nondurable products that ship consistently through the year, which dampens the seasonal swings.

The early signs of the rate recovery are the most important tell for the bull case. One-way truckload revenue per truck per week rose 9.6%, evidence that pricing is beginning to reset higher as the company resets sell-side prices and gains spot exposure into a tightening market. Operating cash flow jumped more than 200% year over year to $89 million, and the FirstFleet integration is running ahead of schedule on its synergy target. The bull case is straightforward: this is a well-run carrier at the bottom of its cycle, taking share and resetting prices, with the operating leverage to produce a large earnings recovery when freight demand turns.

Bear Case

The bear case is the cycle, and it is not a small thing to wave away. Trucking is among the most cyclical businesses in the economy: rates rise when freight demand outruns truck capacity and collapse when capacity outruns demand, and the swings are violent. Werner's own filings describe the current environment plainly as a prolonged weak freight market, one severe enough that the company shrank its fleet, ending 2025 with 350 fewer tractors than the year before. A 1.5% operating margin is the evidence that the downturn is real and ongoing. The risk is not that Werner is poorly run; it is that the timing and strength of the recovery are outside the company's control, and a carrier can stay at trough margins far longer than a holder expects if industry capacity does not exit fast enough.

The demand side is the part that worries a careful reader most. Truckload volumes track goods consumption and industrial activity, and if the broader economy softens, the rate recovery that the bull case depends on stalls or reverses. The 9.6% increase in one-way revenue per truck per week is encouraging, but one-way is the spot-exposed, most volatile part of the business, and a single strong quarter does not establish a trend. Meanwhile the buy-side cost pressure management acknowledged in the quarter, the cost of purchased transportation and capacity it sources, can compress margins even as sell-side rates begin to rise. The company is caught between rates it is trying to push up and costs it does not fully control.

The valuation reflects a recovery that has barely begun. The methods grounded in current earnings power read the price as expensive, which makes sense when current earnings are at a cyclical low; the earnings-power lens, capitalizing today's depressed profit, sits well below the price. The peer-multiple and forward-growth methods are what support the quote, and they do so by assuming the cycle turns and margins normalize toward mid-single digits or better. That is a reasonable assumption over time, but it is an assumption, and it embeds a recovery whose timing is genuinely uncertain. Net debt of roughly $870 million sits at nearly four times trailing operating income, with interest covered about five and a half times, manageable but a real consideration for a company whose earnings can swing sharply with the freight cycle. The bull and the bear agree the margin is at a trough and the company is taking share. They disagree on whether the recovery is near enough, and strong enough, to justify paying for normalized earnings the company is not yet producing.

Valuation

Werner has to be valued through the cycle, not on the current quarter, because the current quarter is near the bottom of one. At a 1.5% adjusted operating margin, today's earnings are depressed, so any method that capitalizes them produces a low number, and any method that assumes normalization produces a high one. The price at $40.70 (June 28, 2026) sits between those, embedding a partial recovery in freight rates and margins toward a mid-cycle level.

The split among the methods is exactly what a cyclical at a trough produces. The earnings-power lens and the asset-value methods read the price as expensive, because they are measuring it against trough profitability and book value. The peer-multiple and forward-growth methods support the price, because they look past the trough to a normalized rate environment. The relative-valuation method in particular lands well above the price, reflecting where a truckload carrier trades on mid-cycle earnings rather than recession earnings. The pattern is not a contradiction; it is the market pricing in a recovery that has started but is not complete. Reading the X-ray honestly means recognizing that the cheap-looking forward methods and the expensive-looking trailing methods are describing the same business at two points in its cycle.

Leverage is the constraint that the cyclicality makes meaningful. Net debt of roughly $870 million at nearly four times trailing operating income, with interest covered about five and a half times, is comfortable at mid-cycle but tightens at the trough, since the same operating leverage that will amplify the recovery also amplified the decline into it. Operating cash flow of $89 million in the quarter, up sharply, shows the cash generation holding up better than the margin, which is reassuring for debt service. The decisive judgment for the value is not any single method's figure; it is a view on the freight cycle. A buyer at this price is underwriting that rates reset higher and margins normalize within a reasonable horizon, the same bet the one-way revenue-per-truck increase of 9.6% is the first piece of evidence for.

Catalysts

The first-quarter 2026 report was the catalyst, and it marked an inflection from loss to modest profit. Revenue grew 14% to $808.6 million, Truckload Transportation Services revenue rose 18% to $594 million, and adjusted operating income swung to a positive $11.9 million with an adjusted operating margin of 1.5%, up 180 basis points from the prior-year loss. EPS came in at 2 cents against an expected loss. The most watched operating metric, one-way truckload revenue per truck per week, rose 9.6%, an early sign of the rate reset, and the FirstFleet acquisition is integrating ahead of schedule on its synergy target.

The forward catalysts are all about the freight cycle and the rate reset. The direction of contract and spot truckload rates over the next several quarters is the single biggest driver of whether margins recover toward mid-cycle, and management pointed to resetting sell-side prices and growing spot exposure as the mechanism. Industry capacity is the other side of that equation: the faster smaller carriers exit, the sooner rates tighten. Dedicated fleet retention and growth, along with continued cost reduction, are the company-specific levers. The next earnings report is the event that shows whether the rate recovery and margin improvement are building or whether the freight market remains stuck near the trough.

Peer Cohorts (Per Segment, With Filing Citations)

Truckload Transportation Services (TTS) (reported)

Werner Logistics (reported)

Methodology Note

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.

Sources

Q1 2026 earnings release, May 2026 · FY2025 10-K, accession 0000793074-26-000071 · Q1 2026 earnings call, May 2026

View the full interactive WERN report on boothcheck