What is HTLD's Intrinsic value?

Heartland Express Inc (HTLD) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Heartland Express Inc's estimated intrinsic value ranges from $27.54 to $27.54 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $27.54 +212.9%

Is Heartland Express Inc (HTLD) undervalued or overvalued?

With the current market price at $8.80, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Heartland Express Inc's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.56 0.79
Cost of equity 6.4% 9.3%
Cost of debt 7.0% 7.0%
Tax rate 25.1% 25.4%
Debt/Equity ratio 0.28 0.28
After-tax WACC 6.2% 8.4%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $167M
Discount Rate (WACC) 8.4% - 6.2%
Enterprise Value $1,982M - $2,698M
Net Debt $176M
Equity Value $1,807M - $2,522M
Outstanding Shares 79M
Fair Value $23 - $32
Selected Fair Value $27.54

Key Financial Metrics

Metric Value
Market Capitalization $692M
Enterprise Value $867M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.90
Current Dividend Yield 66.30%
Dividend Growth Rate (5Y) -7.68%
Debt-to-Equity Ratio 0.28

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Earnings Power Value 100% $2.75
Weighted Average 100% $27.54

Investment Conclusion

Based on our comprehensive valuation analysis, Heartland Express Inc's weighted average intrinsic value is $27.54, which is approximately 212.9% above the current market price of $8.80.

Key investment considerations:

  • Strong projected earnings growth (-3% to -3% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.28)

Given these factors, we believe Heartland Express Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.