 Tightened capacity seen as a spur to both Heartland Express, Inc. NASDAQ: HTLD and Marten Transport, Ltd NASDAQ: MRTN beating estimates, with optimism from analysts going forward.The earnings reports of truckload carriers Heartland Express and Marten Transport released on Thursday, July 16 continued to resonate with investors a day later, with the stock prices of both companies recording significant gains. At approximately 11:50 a.m. EDT, Marten had risen 2.47 per share to 29.43, a gain of 9.16. It has traded Friday in excess of 30. While its earnings report did not exceed forecasts as much as those of Heartland, Marten did split its stock 3-for-2 while maintaining its dividend at 0.04 per share, which is effectively a 50 increase in the yield. Meanwhile, at the same time, Heartland had risen 1.01 per share to 22.36, a gain of 4.73. That came after a July 16 performance following the morning release of its earnings in which the stock rose 4.7 from Wednesday to 21.35. Martens earnings were released after the close.The beat on earnings and revenue for both companies was considerable. At Heartland, GAAP basis earnings per share of 0,24 were 0.10 more than what SeekingAlpha said was the consensus. Revenue of 160.87 million was 8.48 million more than consensus. A report from UBA analyst Thomas Wadewitz described the outperformance as meaningful.At Marten, the earning report of 0,33 per share was also 0.10 more than forecast. Revenue of 212.38 million was 7 million above consensus. Neither Marten nor Heartland are companies that are widely covered by Wall Street equity analysts. But Todd Fowler of KeyBanc covers both and remains bullish. However, he did not change his investment recommendation on either, which already was at Overweight.What comes through his summary of both companys earnings is the bullishness of the freight market and the tightness in capacity. Freight activity improved sequentially during the quarter with strength in late May and June more than compensating for a particularly soft April, Fowler wrote in discussing Heartland. The resumption of Chinese import activity as well as the resumption of economic activity combined to produce a strong recovery in demand during the quarter with some implications from capacity reduction industry side.Late Quarter Strength Continues This MonthFowler, who discussed the earnings with Heartland management after they were released Heartland does not do an earnings call reiterated what the company said in its earnings statement: the market has continued strong into July. July to date, trends have persisted with turndown elevated seasonally, Fowler wrote. Most bid activity is complete. However, sustained tightness may create yield opportunity in 2h 2020.Chris Strain, Heartlands CFO, told FreightWaves in a telephone interview that capacity has definitely tightened up. Prior to the pandemic, Strain said, we were all talking about the back half of 2020 being better. We were in that camp so were starting to see that, he added, though he noted that is only through two weeks of observation. Talking about the recently completed quarter, Strain said April was terrible. The rest of the quarter got progressively better and that trend has continued into July.Wadewitz at UBS also spoke with Heartland management about capacity. On the supply side, HTLD believes there has been some downsizing of fleets and carrier bankruptcies which have contributed to the recent tightness in the truckload market, he wrote. Heartland has always had one of the leading operating ratios OR in the industry. While the company beat expectations on revenue and net income in the quarter, its OR slipped significantly during the quarter. Its non-GAAP adjusted OR was 83, compared to 76.6 a year ago.But what Heartland came in with was well above estimates. For example, Wadewitz forecast was that Heartland would have an OR of 88.4.The OR has weakened in part by the acquisition last year of Mills Transfer. UBS said the OR of the legacy Mills business is in the low 90s. The integration of Mills remains on track with favorable revenue retention and ongoing opportunities to more closely align costs with legacy Heartland operations, KeyBancs Fowler wrote, while also acknowledging the low-90 OR at Mills. KeyBanc also saw the Heartland OR as being better than projected. Net of fuel and gains from sales of equipment, Fowler said the quarters OR was 85.2, better than the estimate of 89.9. But a year ago, the OR net of fuel and gains was 82.7.Fowler increased the price target for Heartland to 26 from 24. As for Marten, Fowler raised the price target for Marten by 2 to 31. Positive Outlook At MartenIn his report, Fowler wrote that his discussions with Marten management after the earnings release indicated sequential improvement through the quarter...with utilization benefiting from the ability to deploy assets in areas or with accounts where demand was strong, more than offsetting customer shutdowns.Although rates are increasing throughout the industry generally, Fowler wrote about Marten that rates remain pressured with revenuetruck balanced by favorable utilization.The KeyBanc report stated further, Overall, we view current quarter results as meaningfully stronger from an operational perspective, demonstrating margin potential in an improved freight environment. Martens consolidated operating ratio, built through the four segments truckload, dedicated, intermodal and brokerage was 88.1 in the second quarter, a significant improvement of 250 basis points from the second quarter of last year. In increasing its target price, KeyBanc and Fowler said it assumes a 90.4 OR for the company in this year, a slight improvement from 90.9 last year. Martens 6-month OR so far this year is 90. Fowler sees an OR of 90 in 2021. Overall, results are supportive of our expectation for gradual operational improvements and an improved margin profile intermediately, combined with modest organic growth, he wrote.The two divisions at Marten that had tough quarters were brokerage and intermodal. Fowler said a brokerage revenue decline of about 21 was in line with its forecasts. But intermodal revenue rising 6 was below the model that showed an 11 gain. A volume increase for Martens intermodal business of 3 was below a projection of 10, with a slightly higher revenue per load gain of 3 compared to KeyBancs projection of 1.More articles by John KingstonGeorgia trucking group: in-person meeting led to no COVID infectionsSP says YRCW situation good enough for an increase in its debt ratingMerrill Lynch boosts Knight Swift, JB Hunt and ArcBestSee more from Benzinga Solving The Recurring Problem Of Mobile Workforce Optimization Autonomous Trucking Startup Plus.ai Reportedly Seeking M Commentary: Combine Optimization, Machine Learning And Simulation To Move FreightC 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. 