Hook / Thesis (quick)
Radiant Logistics (RLGT) is a small-cap, asset-light third-party logistics operator that looks mispriced for a market where lower freight volumes and softer rates are becoming the new normal. That freight slowdown - call it a freight recession - is painful for capacity-heavy carriers but it plays to Radiant's strengths: limited fixed costs, low capex needs, and the ability to arbitrate across modes (truckload, LTL, air, ocean) and geographies. In short, the freight recession is more a feature than a bug for an operator like Radiant.
I'm recommending a tactical long: buy RLGT in the $6.50-7.00 band, use a tight stop to control downside, and hold for 6-12 months while margin recovery and improved cash conversion drive a valuation re-rate.
What Radiant does and why the market should care
Radiant Logistics operates as a third-party logistics firm providing freight forwarding and brokerage across multiple modes in the U.S. and Canada. The business is primarily non-asset (broker/forwarder) which means gross revenue moves with freight flows and rates, while many costs are variable or service-level personnel costs rather than heavy fixed assets.
Why that matters: in a soft freight environment freight rates compress and volumes decline; carriers that own trucks or vessels suffer margin pain. Brokers with flexible cost structures can protect margins, lean operations, and convert cash even at lower revenue levels. Radiant's most recent filings show the company still cash-generative and with meaningful equity on the balance sheet - a cushion that matters in cyclicality.
Evidence from the filings and trends
Use the recent numbers:
- Latest quarter (fiscal Q1 ended 09/30/2025; filing date 11/10/2025) showed revenue of $226.7m and net income attributable to parent of $1.29m (diluted EPS $0.03).
- Looking back over the last four reported quarters (09/30/2025, 03/31/2025, 12/31/2024, 09/30/2024) combined TTM revenue is roughly $908.8m (226.655m + 214.007m + 264.544m + 203.565m = $908.771m).
- Operating income has oscillated: the most recent quarter's operating income was $2.086m (operating margin ~0.9%), while adjacent quarters were higher (eg 12/31/2024 operating income $8.722m). That illustrates volatility but also a baseline of positive operating profit in most quarters.
- Cash flow: Radiant produced net cash flow of $5.26m in the latest quarter, with operating cash flow of $2.459m. The company has shown the ability to generate operating cash in several quarters (e.g., $15.685m in the quarter ended 12/31/2024), even while revenues ebb and flow.
- Balance sheet: total assets of $445.3m with equity of $227.16m and liabilities of $218.17m — modest leverage for a logistics broker and a meaningful equity cushion to absorb shocks.
Put another way, using the dataset's recent diluted share count (about 48.7m shares) and a last-quoted price around $6.76, implied market capitalization is in the neighborhood of $330m. That implies an enterprise value to TTM revenue well under 0.5x (market cap ~ $331m / TTM revenue ~$909m = ~0.36x). For a business that can still generate positive operating cash flow and whose main capital needs are modest, that value-to-sales multiple looks cheap.
Valuation framing
We lack a tidy set of public peer multiples in the dataset. Qualitatively, asset-light logistics/brokerage firms typically trade at low single-digit EV/EBITDA or modest revenue multiples in soft markets; RLGT's implied ~0.36x market cap / revenue is on the low end of where you'd expect even compared with smaller 3PL peers, reflecting either investor skepticism on earnings durability or a market-wide risk-off for freight names.
On an earnings basis, rolling last-four-quarter net income (sum of four most recent quarters) is roughly $13.8m. That produces an implied P/E near 24x using the same share/price estimate (331m market cap / ~$13.8m earnings). That P/E looks elevated relative to the revenue multiple because earnings have been depressed recently and volatile; the story for a re-rate is stabilization of earnings and cash flow, not immediate earnings expansion.
Catalysts (what could re-rate the stock)
- Freight market stabilization - if spot rates stop collapsing and begin to normalize, revenue and operating leverage should lift margins.
- Improved cash conversion and working capital management reflected in higher operating cash flow in upcoming quarters.
- Investor recognition of RLGT's asset-light resilience: a reappraisal by small-cap investors moving valuation multiples closer to peers.
- Corporate actions such as opportunistic share buybacks or bolt-on acquisitions that increase per-share earnings and improve utilization of Radiant's existing infrastructure.
Trade idea - actionable plan
This is a tactical long with defined entry, stop, and target levels. Position sizing should reflect your portfolio risk tolerance; I treat this idea as medium-high risk.
Entry: Buy $6.50 - $7.00 (limit orders encouraged).
Stop: $5.20 (about -20% from entry midpoint). Reduce size or exit if price breaks and holds below $5.20.
Target 1: $9.00 (near-term recovery + re-rate; ~+35% from $6.70).
Target 2: $12.00 (full re-rating scenario if margins recover and investors revalue the business; ~+79% from $6.70).
Time horizon: 6-12 months (swing to position trade).
Risk/Reward: Using $6.70 entry, risk to stop ~$1.50 (~22%); reward to Target 1 ~$2.30 (~34%); reward-to-risk ~1.6x to Target 1 and ~3.5x to Target 2.
Risks and counterarguments
Always play both sides. Below are the primary risks to this thesis followed by at least one substantive counterargument.
- Prolonged low-rate environment - If the freight recession lengthens, volumes and fees may compress further, dragging down revenues and keeping operating leverage weak. Radiant's asset-light model helps, but revenue compression can still kill EPS if it persists.
- Working capital and receivables stress - Logistics firms can face counterparty exposure if shippers or carriers default or delay payments. Accounts payable and other current liabilities are material; any deterioration could pressure liquidity.
- Execution risk - Management must control SG&A and operating expenses. The firm has shown margin variability; failure to cut costs or execute on integration and pricing could mean continued weak profits.
- Macro shocks - Geopolitical events, trade disruptions, or sudden fuel-cost spikes could change volumes and cost structures quickly and unfavorably.
- Valuation risk - The implied low revenue multiple reflects real skepticism from the market; if sentiment toward small-cap logistics remains negative, the stock may remain depressed even if fundamentals improve slowly.
Counterargument: The freight recession may actually be structural rather than cyclical - think shift to nearshoring and different modal mixes reducing demand for certain forwarding services. If Radiant's core flows shrink structurally, then the company could face a durable top-line decline and the low valuation is a justified discount. That outcome would materially change the trade.
What would change my mind
I will close the trade or flip to neutral/short if any of the following occur:
- Q2 results (next report) show operating cash flow turning sharply negative and management provides weak guidance on volumes and utilization.
- The company discloses material counterparty losses or a significant deterioration in accounts receivable collections.
- Despite improving freight indicators, Radiant fails to translate revenue gains into margin recovery — suggesting structural business deterioration.
Conclusion / stance
Radiant Logistics is a small, cash-generating, asset-light 3PL that trades at a low revenue multiple versus its recent TTM sales. The freight recession cuts both ways: headline revenue may be lower, but Radiant's operational profile and balance sheet give it the flexibility to survive and outlast weaker competitors. For patient, risk-aware investors, a tactical long with a tight stop makes sense: buy in the $6.50-7.00 band, protect principal with a $5.20 stop, and target $9 and $12 on normalization and a re-rate.
My conviction is pragmatic: this is not a low-volatility safe yield trade. It is, however, a disciplined way to play a market where lower volumes have separated durable, low-capex brokers from asset-heavy carriers. If Radiant demonstrates consistent cash conversion and margin stability over the next two quarters, the market should award a higher multiple — and the trade will have paid off.
Relevant filings cited
- Quarter ended 09/30/2025 - Filing date 11/10/2025 (Q1 FY2026): revenues $226,655,000; net income attributable to parent $1,293,000; operating cash flow $2,459,000.
- Quarter ended 03/31/2025 - Filing date 05/12/2025: revenues $214,007,000; net income $2,572,000.
- Quarter ended 12/31/2024 - Filing date 02/10/2025: revenues $264,544,000; net income $6,509,000; operating cash flow $15,685,000.
Disclosure: This is not investment advice. The trade idea is a research-oriented, actionable plan that includes entry, stop and targets but investors should do their own due diligence and size positions appropriately.