$6.62
$37.03
bear $6.62
base $21.76
bull $37.03
margin of safety $9.00
market price* $32.81
Werner Enterprises is a truckload carrier operating across the 48 contiguous U.S. states, with cross-border service into Mexico and Canada, plus a freight brokerage and logistics arm (truck brokerage, freight management, intermodal and final-mile delivery). At the end of 2025 it ran about 7,100 company trucks: 4,850 in Dedicated (trucks assigned to one customer's distribution center or plant, mostly on 2-to-5-year contracts whose rates are renegotiated annually) and 2,250 in One-Way Truckload (contracts often cancellable on 30 days' notice). Truckload services were 69% of 2025 revenue and Werner Logistics 29%. The five largest customers were 38% of revenue and Dollar General alone was 11%. WHAT AN OWNER KEEPS. Replacing the fleet is the main cost of staying in business, so we measure cash from operations after removing swings in receivables and payables, deducting stock compensation, and deducting equipment purchases net of what used trucks and trailers sell for (only the slice of spending that scales with revenue growth is treated as growth and left out). On that basis owner earnings per share ranged from a $1.76 loss in 2016 to $4.53 in 2021, and were -$0.67 in 2023, $0.05 in 2024 and $0.93 in 2025. Reported 2025 results (a $14.4 million net loss) were distorted by items that do not show up in this cash measure: a $44.2 million restructuring charge on One-Way Truckload ($42.7 million non-cash) and a $45.7 million non-cash reversal of an insurance liability after Werner won its Texas Supreme Court appeal of a $92.0 million 2018 verdict. An $18.0 million class-action settlement agreed in October 2025 (subject to court approval) was accrued at year-end 2025 but not yet paid, so we count it as an obligation below. Acquired-intangible amortization is about $10 million a year and is added back as a sunk cost; in 2025 Werner also wrote down $21.7 million of acquired trademarks and customer relationships in its One-Way business, which is one reason we credit the newest acquisition only at a modest estimated amount. ANCHOR. Lenders are paid separately from owners, so we value the business before interest and then subtract what it owes. Adding cash interest back, annual business cash flow was: 2016 -$125M; 2017 $111M; 2018 $124M; 2019 $145M; 2020 $166M; 2021 $311M; 2022 $217M; 2023 -$16M; 2024 $43M; 2025 $97M. The middle value of the decade is about $117 million. We use all ten years because they contain weak years (2016, 2023, 2024), a steady stretch (2017-2020) and the 2021-22 freight peak; a shorter window would catch only one phase. We did not restart the clock at the January 2026 FirstFleet purchase because only five months of results exist; it is handled separately. Growth-path check: business cash flow rose 125% in 2025 ($43M to $97M); the base case assumes 0% for the first year (flat at $97M), below the trailing rate. First-half 2026 does not show a recovery in operating profit: second-quarter operating income was $16.9 million against $66.3 million a year earlier ($20.6 million excluding the 2025 insurance reversal). First-half operating cash flow was $167 million against $75 million, but net equipment spending was negative (used-equipment sales of $90.4 million exceeded purchases of $81.8 million) so we did not extrapolate it; Werner plans $185-255 million of net equipment spending in 2026, and says 2025 spending was below its historical range, which is why we rely on the full decade rather than 2025. FIRSTFLEET. On January 27, 2026 Werner bought FirstFleet, a dedicated carrier with about 2,400 tractors, 11,000 trailers and 37 properties near 130 customer sites, for $245 million (including up to $35 million of earn-out tied to revenue from April 2026 to March 2027), plus $37.8 million of real estate and about $57 million of assumed finance leases. Werner had not reported FirstFleet's own revenue or profit in the filings we reviewed, so we estimated its contribution from first-half 2026 results: operating profit plus depreciation (excluding the 2025 insurance reversal and a 2026 equipment impairment) was about $24 million higher than a year earlier, of which about $14 million was higher depreciation, which stands in for the spending needed to replace those trucks. That leaves roughly $10 million over five months, about $24 million a year before tax and about $18 million after tax, assuming the rest of the business was flat. This is our estimate, not a reported figure. BASE CASE. Year one $97 million, then about $117 million (the decade's middle value) plus $18 million from FirstFleet, about $135 million a year with no further growth. We let it continue because the business produced positive business cash flow in 8 of the last 10 years while paying for its own fleet. We credit no other growth: past expansion came largely from acquisitions, which are not a steady repeatable increment, and we leave out rate recovery, share gains and management margin targets. Business worth about $2.22 billion ($37.04 per share); owes about $0.92 billion ($15.28 per share); difference $21.76 per share. If FirstFleet adds nothing the value is about $17.00, and if in addition a normal year resembles the decade without its 2021-22 peak years it is about $13.50. BEAR CASE. The freight downturn that began in 2023 lasts two more years: business cash flow of $70 million in year one (the 2024-25 average) and $43 million in year two (the 2024 level), when the $1.075 billion revolving credit facility comes due on December 20, 2027 (it carries covenants on net debt to EBITDA and EBITDA to interest). We assume refinancing at 1.5 percentage points above current cost for three years (about $13.5 million a year) and a $30 million one-time liability cost (two claims at the $15 million Werner retains per claim under policies renewed August 2025; the 2018 verdict shows how large claims can be). After that a normal year is $104 million (the decade's middle value without the 2021-22 peak years), with one more downturn like 2023-2025 (those three years averaged $42 million) in each decade, leaving about $85 million a year on average. FirstFleet is credited nothing. In the second year the cash flow is slightly under the roughly $47 million annual interest bill (second-quarter 2026 pace), which we judged acceptable for one year given about $1.83 billion of net property and equipment. Business worth about $1.31 billion ($21.90 per share); owes about $0.92 billion; difference $6.62 per share. BULL CASE. Year one about $137 million (the first-half 2026 pace with equipment spending at the low end of Werner's plan). Then the decade's middle value of $117 million, plus FirstFleet earning the same cash per truck as today's 7,100-truck fleet (about $40 million), plus one freight upcycle per decade like 2020-2022 (those years averaged $231 million), about $191 million a year. Business worth about $3.14 billion ($52.31 per share); owes about $0.92 billion; difference $37.03 per share. Rate recovery without a named contract is not assumed. WHAT IT OWES. Borrowings of $793.0 million at June 30, 2026 (revolving credit plus a receivables-backed facility), finance leases of $48.3 million, the FirstFleet earn-out liability of $30.4 million, the outside owners' interest in a partly owned subsidiary of $26.9 million and the $18.0 million settlement: about $916.6 million, or $15.28 per share on about 60 million shares. We did not offset the $57.0 million of cash, treating it as working cash. At year-end 2025 variable-rate debt cost about 4.8% to 5.6% and swapped portions were fixed at about 5.3% to 6.4%, near the going cost of borrowing, so we made no adjustment to the debt figure. HOW WE SET THE MARGIN-OF-SAFETY PRICE. We are not very sure of the earnings level: business cash flow ranged from -$125 million to +$311 million in the decade and was below $50 million in three of ten years. The worst plausible event is a freight downturn deeper or longer than 2023-2025 arriving as the revolver comes due in December 2027, or a liability verdict above Werner's $15 million per-claim retention. The structure should survive it: net property and equipment is about $1.83 billion against about $0.92 billion of claims, Werner sold used equipment at a gain over book value in every year from 2014 to 2025, and the dividend is discretionary. If we are wrong on the two things we are least sure of, the shares would be worth about $13.50 on the base-case path. The price assumes a three-to-five-year holding period, during which the dividend is about 56 cents a share a year (about $8.4 million a quarter), which weak years do not fully cover. The margin-of-safety price is $9.00. At that price the equity is valued at about $540 million and, with claims, the whole business about $1.46 billion; cash left after about $47 million of annual interest is about 16% of that equity value each year on the base path, 13% if FirstFleet adds nothing and 7% on the bear-case cash flow. Over five years, if the base path holds, cash left after interest would repay roughly half of the claims and lift underlying value to about $29 a share, which the base case implies is a return near 26% a year; if FirstFleet adds nothing but the decade's middle value holds, about $23 and 21% a year; in the weaker case above, about $18 and 15% a year. In the bear case, worth $6.62, the $9.00 price implies a loss of roughly a quarter before dividends. The price accepts that exposure because the structure survives it, and is not set higher because the 20% return depends on the decade's middle value holding without FirstFleet. WHAT WOULD MAKE THIS WRONG. Freight conditions staying weak beyond 2027; FirstFleet earning less than estimated or its dedicated contracts being re-priced down; the revolver being refinanced on worse terms; a large liability claim. Earlier estimates were built on a different basis and are not comparable. FirstFleet's separate results are not reported in the filings we reviewed, and we could not confirm from them whether the $18.0 million settlement has been paid since year-end.