In this report, we revisit an October 2021 report that highlighted how the shares of publicly traded SONAR subscribers outperformed their peer groups.
We did not suggest in that report that subscribing to SONAR was driving that outperformance, and we do not suggest anything similar here. In fact, we consider the opposite to be more plausible — companies in a strong financial position, of which stock price outperformance is one indicator, more often make discretionary investments, such as in third-party data and analytical tools.
Therefore, it would not surprise us if other freight data providers can also make the claim — that their customers also outperformed the market. Companies that prioritize market intelligence might subscribe to every data source they can get their hands on.
What’s changed since we wrote the October 2021 report is that the freight market weakened (we’ll save colorful words like “bloodbath” for other reports) and the SONAR customer base has diversified to include more shippers, primarily in the CPG, retail and consumer-discretionary verticals.
Outperformance wasn’t universal for SONAR customers — this time around, freight (carriers/brokers/logistics) and retail companies outperformed their benchmarks (the Dow Transport Index and the S&P Retail Index, respectively) while our CPG customers underperformed the Consumer Staples Index. Overall, the total list of SONAR customers, which also includes a handful of companies in the automotive, consumer-discretionary and financial verticals, outperformed the S&P 500.
Near-term volatility aside, we believe companies with long-term share price outperformance do so because they generate superior returns on invested capital. We take solace in seeing companies with track records of effectively deploying capital also considering SONAR a worthwhile investment.
Here are a few highlights:
- Since April 2018, the average stock price of SONAR customers increased 87%, while the S&P 500 increased 69%.
- Shares of freight and logistics companies (carriers and 3PLs) that are SONAR subscribers posted a 168% return since April 2018 versus a 57% return for the Dow Transport Index.
- Since April 2018, the index of SONAR retail customers posted a total return of 71% versus the S&P Retail Select Industry Index of 50%.
- SONAR subscribers in the CPG industry underperformed their peer group, returning 58% since April 2018 versus the iShares U.S. Consumer Staples ETF (IYK) of 100%.