We recently issued an updated report on J.B. Hunt Transport Services, Inc. JBHT. Factors like high debt levels, lower freight demand and coronavirus-related woes are hurting the company’s financials. However, strong performance of the Dedicated Contract Services (DCS) segment is encouraging.
J.B. Hunt’s DCS segment has been performing impressively and aiding the top line. Notably, revenues at the segment rose 25% year over year in 2019. Moreover, operating income at this segment grew 39% during the year. Its revenues are further expected to grow, if this key sector continues to deliver solid performance in the upcoming quarters.
Successive acquisitions carried out by the company to expand final-mile delivery services (part of the DCS segment) are impressive. The acquisitions are expected to strengthen its presence in the fast-evolving market of delivering bulky goods straight to customers’ residences.
J.B. Hunt Transport Services, Inc. Price
J.B. Hunt Transport Services, Inc. price | J.B. Hunt Transport Services, Inc. Quote
However, a sluggish freight scenario is affecting volumes at the Truck (JBT) segment. Revenues at the segment declined 6.7% in 2019. The coronavirus outbreak is a setback for the company and might delay shipments, thereby hurting first-quarter 2020 results.
High operating expenses (which increased 6.3% in 2019) due to factors like high wages for drivers and increased rail purchased transportation costs have been limiting its bottom-line growth for quite some time.
The debt-to-equity ratio (a measure of J.B. Hunt financial leverage) stands at 57.2. A high debt-to-equity ratio implies that the company is funding most of its ventures with borrowings.
Zacks Rank & Stocks to Consider
J.B. Hunt currently carries a Zacks Rank #3 (Hold).
better-ranked stocks to consider are GATX Corporation GATX, Blucora, Inc. BCOR and Höegh LNG Partners LP HMLP. GATX sports a Zacks Rank #1 (Strong Buy), whereas Höegh LNG and Blucora carry a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term (three to five years) expected earnings per share growth rate for GATX, Blucora and Höegh LNG is pegged at 15%, 20% and 8.5% respectively.
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