Quality Distribution Inc. (QLTY) has beaten the Zacks Consensus Estimate in five of the last six quarters and matched in the remainder, resulting in an average earnings surprise of 35.91%. The strong surprise along with high future earnings growth potential helped this chemical bulk truckload transporter become a Zacks #1 Rank (Strong Buy) on May 11, 2012.

Robust Quarter

On May 7, 2012, Quality Distribution reported first quarter earnings per share of $0.26, which beat the Zacks Consensus Estimate by 73.3% and improved 116.7% over last year’s $0.12.

Total operating revenue improved 7.87% to approximately $192 million, which also surpassed the Zacks Consensus Estimate by 1.75%. Increased revenue and profitability in the energy logistics business helped the company post solid performances.

The stock price rose 13% in the session following the report.

Quality Distribution focuses on strategic acquisitions in order to expand its market share in the energy-related transportation segment. On June 4, 2012, the company completed the acquisition of certain assets of Wylie Bice Trucking LLC, strengthening its foothold in the unconventional oil and gas industry within the Bakken shale region.

Strong Earnings Estimate Revisions

Estimates for Quality Distribution have been rising over the last 60 days. The Zacks Consensus Estimate for 2012 is up 8.8% to 99 cents, while the guidance for 2013 has advanced 13.3% to $1.28. The current Zacks Consensus Estimate for 2012 indicates a 40.71% year-over-year growth. Similarly, the current estimate for 2013 implies year-over-year growth of 29.95%.

Valuation Looks Attractive

Quality Distribution is currently trading at attractive multiples with respect to most of the valuation metrics. The stock currently trades at a forward P/E of 10.46x, implying a discount of nearly 42% compared with the peer group average of 14.85x. The current PEG ratio is 0.62, a 38% discount to the benchmark of 1.0 for a value stock. As a result, the long-term earnings growth projection of 42.5% is currently priced at a discount.

Chart Shows Growth Potential

The one-year stock price chart of Quality Distribution finds support at around $8.3 and resistance at $14.54. The current stock price of Quality Distribution is indicating a downside risk of approximately 19.4%, while providing an upside potential of nearly 41.2%. This Zacks #1 Rank (Strong Buy) stock is showing solid growth potential.


Quality Distribution Inc. was founded in 1984. Formerly, known as MTL Inc., the company changed its name to Quality Distribution in 1999. The company is the largest chemical bulk trucker and largest intermodal tank container and depot service provider in North America.

QUALITY DISTRIB (QLTY): Free Stock Analysis Report

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