Here's Why Investors Should Retain J.B. Hunt (JBHT) Now
J.B. Hunt Transport Services, Inc. JBHT is benefiting from pro-investor steps and low operating expenses. However, low liquidity is worrisome.
Factors Favoring JBHT
We are impressed by the company’s efforts to reward its shareholders through dividend payments and share repurchases. In January 2023, JBHT’s board of directors has approved a dividend hike of 5%, thereby raising its quarterly cash dividend from 40 cents per share to 42 cents. The increased dividend will be paid out on Feb 24, 2023, to all its shareholders of record as of Feb 10, 2023. The move reflects JBHT’s intention to utilize free cash to enhance its shareholders’ returns.
The company is also active on the buyback front, having resumed the same in the fourth quarter of 2020 after a temporary pause amid COVID-19 concerns. During 2021, J.B. Hunt repurchased shares worth $150 million.
In the second quarter of 2023, JBHT acquired almost 315,000 shares for $53 million. As of Jun 30, 2023, JBHT had approximately $467 million remaining under its share repurchase authorization.
Declining operating expenses due to lower fuel costs, purchased transportation costs, and salaries, wages and benefits expenses have the potential to boost J.B. Hunt's bottom line. In second-quarter 2023, operating expenses fell 17.9% year over year to $2,861.91 million.
Key Risks
JBHT’s weak cash position is worrisome. Its cash and cash equivalents were $295.92 million at the end of second-quarter 2023, much lower than the long-term debt of $1,195.30 million.
Zacks Rank
JBHT currently carries Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks for investors interested in the Zacks Transportation sector are GATX Corporation GATX and Triton International Limited TRTN.
GATX, which presently carries a Zacks Rank #2 (Buy), has strengthened its railcar leasing operations. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For third-quarter and full-year 2023, GATX’s earnings are expected to register 36.6% and 14.3% growth, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2, is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. Its current ratio (a measure of liquidity) was 3.83 at the end of second-quarter 2023. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.
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J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
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