Will Forward Air Stock See A Recovery After 75% Fall This Year?

FWRD: Forward Air logo
Forward Air

The stock price of Forward Air (NASDAQ: FWRD), an asset-light freight and logistics company with operations in the United States and Canada, trades at $15 per share, about 90% below its peak level of $125 seen in January 2022. FWRD stock was trading at $92 in early June 2022, just before the Fed started increasing rates, and is now 84% below that level, compared to a substantial 40% gain for the S&P 500 during this period. Our detailed analysis of Forward Air’s upside post-inflation shock captures trends in the company’s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock’s performance during the 2008 recession.

Forward Air stock has been weighed down lately due to its acquisition of Omni Logistics. Forward Air had initially offered $150 million cash and 37.7% Forward’s pro-forma equity shares to Omni. Forward Air was also planning to absorb Omni’s debt of $1.4 billion, taking the overall deal value to $3.2 billion. This raised concerns among investors, including the activist investor – Ancora – which stated that Forward Air was overpaying for Omni. This led to a significant correction in FWRD stock from levels of around $120 in early August 2023 to $65 in two weeks. Forward Air desired to get out of the deal amid raised investors concerns, but Omni sued Forward Air to close the deal. There was a revised agreement drafted, making the overall deal value at $2.1 billion, versus $3.2 billion deal earlier. The acquisition per the new deal was completed in January this year. [1]

Furthermore, transportation companies are seeing soft demand, weighing on their earnings performance. Forward’s earnings over the last four quarters were lower than the street expectations. This didn’t bode well for its stock. However, the decrease in FWRD stock has been far from consistent. Returns for the stock were 58% in 2021, -13% in 2022, and -40% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that FWRD underperformed the S&P in 2023 and this year.

In fact, consistently beating the S&P 500 — in good times and bad — has been difficult over recent years for individual stocks; for heavyweights in the Industrials sector including GE, CAT, and RTX, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could FWRD face a similar situation as it did in 2023 and underperform the S&P over the next 12 months — or will it see a recovery? FWRD stock did see a sharp 22% rise on Tuesday, May 28, after one of the research firms upgraded the stock from “underperform” to “peer perform.” The $22 average of analysts’ price estimates reflects over 45% upside from the current market price of $15.

2022 Inflation Shock
Timeline of Inflation Shock So Far:

  • 2020 – early 2021: Increase in money supply to cushion the impact of lockdowns led to high demand for goods; producers unable to match up.
  • Early 2021: Shipping snarls and worker shortages from the coronavirus pandemic continue to hurt supply.
  • April 2021: Inflation rates cross 4% and increase rapidly.
  • Early 2022: Energy and food prices spike due to the Russian invasion of Ukraine. Fed begins its rate hike process.
  • June 2022: Inflation levels peak at 9% – the highest level in 40 years. The S&P 500 index declined more than 20% from peak levels.
  • July – September 2022: Fed hikes interest rates aggressively – resulting in an initial recovery in the S&P 500 followed by another sharp decline.
  • October 2022 – July 2023: Fed continues rate hike process; improving market sentiments helps S&P500 recoup some of its losses.
  • Since August 2023: Fed has kept interest rates unchanged to quell fears of a recession, and it is prepared for rate cuts in 2024.

In contrast, here’s how FWRD stock and the broader market performed during the 2007/2008 crisis.

Timeline of 2007-08 Crisis

  • 10/1/2007: Approximate pre-crisis peak in S&P 500 index
  • 9/1/2008 – 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)
  • 3/1/2009: Approximate bottoming out of S&P 500 index
  • 12/31/2009: Initial recovery to levels before accelerated decline (around 9/1/2008)

Forward Air and S&P 500 Performance During 2007-08 Crisis

FWRD stock declined from $30 in September 2007 to $17 in March 2009, as the markets bottomed out, implying it lost 44% of its pre-crisis value. It recovered to $25 levels in early 2010, reflecting a solid 50% growth between March 2009 and January 2010. The S&P 500 Index saw a decline of 51%, falling from levels of 1,540 in September 2007 to 757 in March 2009. It then rallied 48% between March 2009 and January 2010 to reach levels of 1,124.

Forward Air’s Fundamentals Over Recent Years

Forward Air’s revenue increased from $1.3 billion in 2020 to $1.4 billion in 2023, and $1.6 billion over the last twelve months. However, the 2023 sales reflected a sharp 18% y-o-y fall, due to decreased network and truckload as well as intermodal revenues. Forward Air’s earnings per share stood at $6.52 in 2023, versus $0.87 in 2020.

Does Forward Air Have A Sufficient Cash Cushion To Meet Its Obligations Through The Ongoing Inflation Shock?

Forward Air’s total debt surged from $243 million in 2020 to $2.1 billion now, while its cash increased from $40 million to $152 million over the same period. The company garnered $181 million in cash flows from operations in 2023. The company has a high debt and isn’t in a great position to meet its near-term obligations. Its debt as a percentage of equity currently stands at a large 500%.


With the Fed’s efforts to tame runaway inflation rates helping market sentiments, we believe FWRD stock has the potential for more gains once fears of a potential recession are allayed. While its stock may see some positive action from the recent upgrade, it is unlikely to see the levels it was trading at in 2022, anytime soon. Furthermore, high debt levels remain a near-term concern for the company. 

 Returns May 2024
MTD [1]
YTD [1]
Total [2]
 FWRD Return -32% -76% -68%
 S&P 500 Return 5% 11% 136%
 Trefis Reinforced Value Portfolio 7% 6% 656%

[1] Returns as of 5/29/2024
[2] Cumulative total returns since the end of 2016

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  1. Forward Air to Complete Omni Acquisition at Lower Price Tag, Ben Glickman, The Wall Street Journal, Jan 22, 2024 []