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JB Hunt (JBHT) Up 6.4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for JB Hunt (JBHT). Shares have added about 6.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is JB Hunt due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at J.B. Hunt in Q2

J.B. Hunt reported better-than-expected second-quarter 2021 results. Quarterly earnings of $1.61 per share surpassed the Zacks Consensus Estimate of $1.55. The bottom line surged 41.2% year over year due to higher revenues across all segments.

Total operating revenues of $2908.4 million outperformed the Zacks Consensus Estimate of $2722 million and also jumped 35.5% year over year. Total operating revenues, excluding fuel surcharges, rose approximately 31.2% year over year. The top line was driven by robust performances across all segments.

Quarterly operating income (on a reported basis) climbed 38% to $241.5 million, driven by higher volumes and productivity, among other factors. Meanwhile, operating expenses rose 35.3%.

Segmental Highlights

Intermodal division generated quarterly revenues of $1.29 billion, up 21% year over year. Volumes increased 6% year over year with eastern network volumes and transcontinental volumes rising 9% and 3%, respectively. Operating income increased 26% year over year to $134.64 million

Dedicated Contract Services segment revenues rose 17% from the year-ago period to $621 million owing to fleet productivity improvement and increase in average revenue producing trucks. However, operating income declined 5% to $79 million.  

Integrated Capacity Solutions revenues skyrocketed more than 100% year over year to $607 million. Segmental volumes climbed 20% from the year-ago period with truckload volumes increasing 30%. Revenue per load soared 66% owing to favorable customer freight mix as well as higher contractual and spot rates. The segment’s operating income was $3.1 million in the reported quarter, against an operating loss of $13.1 million in the second quarter of 2020.

Final Mile Services revenues surged 52% year over year to $212 million due to the addition of multiple customer contracts implemented over the last year. Notably, the year-ago period was characterized by temporary suspension of operations due to coronavirus-led woes. The segment’s operating income was $10.7 million in the reported quarter, against an operating loss of $5.2 million in the year-ago period. Operating income benefited from higher volumes in the quarter.

Truck revenues were up 70% to $184 million. Excluding fuel surcharge revenues, Truck revenues rose 66% year over year due to 58% increase in revenue per load and 5% rise in load count. At the end of the second quarter, total tractors and trailers were 1,770 and 8,958, respectively, compared with the respective year-ago quarter’s figures of 1,897 and 7,985. Meanwhile, operating income soared more than 300% to $14.2 million.

Liquidity & Buyback

The company exited the second quarter with cash and cash equivalents of $570.92 million compared with $313.3 million at the end of 2020. Long-term debt was $1.30 billion compared with $1.31 billion at 2020-end. Net capital expenditures at the end of Jun 30, 2021 came to $261 million approximately compared with $265 million at the end of the same period in 2020.

During the reported quarter, J.B. Hunt repurchased around 484,000 shares for approximately $81 million. The company had approximately $416 million remaining under its share repurchase authorization at the end of the second quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, JB Hunt has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, JB Hunt has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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