Despite high operating expenses, shares of J.B. Hunt Transport Services, Inc. JBHT have fared well in a month’s time. The stock has gained 13.3% compared with the industry’s rise of 10.6%.
Reasons for Impressive Price Performance
The Lowell, AR-based company performed impressively in the fourth quarter of 2018, delivering better-than-expected earnings per share (EPS) and revenues. EPS (excluding 96 cents from non-recurring items) of $1.77 outpaced the Zacks Consensus Estimate of $1.48. The bottom line benefitted from reduced tax rates as a result of the current tax law.
Total operating revenues increased 16.5% year over year to $2,317.8 million and beat the Zacks Consensus Estimate of $2,297.8 million. The top line expanded year over year. Higher freight rates due to increase in shipping demand boosted top-line results. Impressive performances in the key segments also contributed to the top line.
Further, we are positive about J.B. Hunt's growth through acquisitions. To this end, the company inked a definitive agreement to acquire Cory 1st Choice Home Delivery through its subsidiary — J.B. Hunt Transport — in January 2019. The move focuses on strengthening its presence in the fast-evolving market of delivering bulky goods to customers’ doorstep (Final Mile Delivery). With significant growth in shopping space, traditional freight is being outweighed by substantial growth in last-mile deliveries. (Read more: J.B. Hunt to Buy Cory 1st Choice Home Delivery, Stock Gains)
Moreover, the company’s efforts to reward shareholders in the form of dividend payments and share repurchases look encouraging as well. In January 2019, J.B. Hunt hiked quarterly dividend to 26 cents per share, indicating a rise of 8.3% over the previous payout. On the buyback front, the company bought back 494,000 shares for approximately $50 million in the final quarter of 2018. As on Dec 31, 2018, the company had around $371 million remaining under the share buyback program.
Additionally, J.B. Hunt has an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three scores. Also, the company's trailing 12-month return on equity (ROE) underlines growth potential. The company’s ROE of 30.7% compares favorably with the industry’s 12.6%, which indicates the company’s capability to use shareholders’ funds efficiently.
Zacks Rank & Key Picks
J.B. Hunt carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the Zacks Transportation sector are Spirit Airlines, Inc. SAVE, Azul S.A. AZUL and Air France-KLM SA AFLYY. While Spirit Airlines carries a Zacks Rank #2 (Buy), Azul and Air France sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Spirit Airlines, Azul and Air France have gained 38.8%, 62.6% and 21.1% in the past six months, respectively.
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Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
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