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Will Freight Softness Mar J.B. Hunt's (JBHT) Q4 Earnings?

Zacks Equity Research

J.B. Hunt Transport Services, Inc. JBHT is scheduled to report fourth-quarter 2019 results on Jan 17, before the market opens.

The Zacks Consensus Estimate for fourth-quarter 2019 earnings has been revised 1.8% downward in the past 90 days. As far as its earnings history is concerned, the company beat estimates in only two of the last four quarters.

Let’s see how things are shaping up for this earnings season.

Similar to the last few quarters, escalating operating expenses due to high driver wages and increased rail purchased transportation costs are likely to have weighed on the company’s earnings. These apart, acquisition-related costs and rising capital expenditures might have put pressure on its bottom line.

Additionally, continued weakness in the freight environment is likely to have taken a toll on the Integrated Capacity Solutions (ICS) and Truck (JBT) segment revenues. The Zacks Consensus Estimate for revenues at the ICS segment implies a 1.2% dip from the year-ago reported number. The same for JBT indicates an 11% decline from that reported in the fourth quarter of 2018.

However, increased truck productivity is expected to have driven growth at the Dedicated Contract Services (DCS) segment. Within the DCS segment, Final Mile Services (FMS) revenues are likely to have been strong, courtesy of robust growth in online shopping.

The Cory 1st Choice Home Delivery acquisition (completed last February), which strengthened the company’s presence in the fast-evolving market of bringing bulky goods straight to the customers’ doorstep (Final Mile Delivery), is anticipated to have boosted the FMS division’s performance. The Zacks Consensus Estimate for DCS revenues suggests an approximate 23% surge from the year-ago reported number.

J.B. Hunt Transport Services, Inc. Price and EPS Surprise

 

J.B. Hunt Transport Services, Inc. Price and EPS Surprise

J.B. Hunt Transport Services, Inc. price-eps-surprise | J.B. Hunt Transport Services, Inc. Quote


Earnings Whispers

The proven Zacks model does not conclusively predict an earnings beat for J.B. Hunt in the fourth quarter of 2019. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: J.B. Hunt has an Earnings ESP of -4.08% as the Most Accurate Estimate is pegged at $1.5, lower than the Zacks Consensus Estimate of $1.56. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: J.B. Hunt carries a Zacks Rank #3.

Highlights of Q3 Earnings

In the last reported quarter, the company witnessed a negative earnings surprise of 2.8%. However, total operating revenues surpassed the Zacks Consensus Estimate and also increased 7% year over year owing to strong performance of the Dedicated Contract Services (DCS) segment.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Azul S.A. AZUL, Copa Holdings, S.A. CPA and Canadian Pacific Railway Limited CP as these stocks possess the right combination of elements to come up with an earnings beat in their next releases.

Azul has an Earnings ESP of +13.33% and a Zacks Rank of 1.

Copa Holdings is a #3 Ranked stock and has an Earnings ESP of +3.33%.

Canadian Pacific has an Earnings ESP of +0.16% and a Zacks Rank of 3. The company will release fourth-quarter 2019 earnings numbers on Jan 29.

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