Why Is JB Hunt (JBHT) Up 1.8% Since Last Earnings Report?
A month has gone by since the last earnings report for JB Hunt (JBHT). Shares have added about 1.8% in that time frame, underperforming 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 catalysts.
Earnings Miss at J.B. Hunt in Q3
J.B. Hunt’s third-quarter 2023 earnings of $1.80 per share missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
Total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year. Total operating revenues, excluding fuel surcharges, decreased 15% year over year. The downfall was due to decline in revenue per load of 14% in Intermodal (JBI), 22% in Truckload (JBT), anda 38% decline in volume in Integrated Capacity Solutions (ICS), a 20% decrease in stops in Final Miles Services (FMS), and a 1% decline in average revenue producing trucks in Dedicated Contract Services (DCS). These were partially offset by a 1% increase in JBI volumes and a 6% increase in JBT loads versus the prior-year period.
Operating income for the third quarter decreased 33% year over yearto $241.7 million, owing to lower revenue across all business segments, higher equipment-related costs, and higher insurance and claims expense compared to the year-ago reported quarter. Additonally, third quarter 2023 included an $8 million net loss from the sale of equipment.
Segmental Highlights
Intermodal division generated quarterly revenues of $1.56 billion, down 15% year over year, owing to a 16% decrease in gross revenue per load, resulting from changes in the mix of freight, customer rates, and fuel surcharge revenue. Revenue per load, excluding fuel surcharge revenue, fell 14% year-over-year. Eastern network loads declined 3%, while transcontinental loads increased 4%.
Operating income fell 41% in the third quarter owing to lower revenue, which was partially offset by the resulting impact of absorbing network and equipment costs with higher volume.
Dedicated Contract Services segment revenues fell 4% from the year-ago period to $892 million due to a 2% decrease in productivity (revenue per truck per week) versus the prior period.
Operating income fell 4% year over yeardue to the higher equipment-related costs, insurance and claims expense, and a net $6.7 million year-over-year increase in loss on sale of equipment. These were partially offset by the maturing of new business onboarded over the trailing twelve months.
Integrated Capacity Solutions revenues decreased 48% year over year to $298 million. Segmental volumes decreased 38%. Revenue per load fell 17% owing to lower contractual and transactional rates and changes in customer freight mix.
JBHT reported an operating loss was $9.4 million in the reported quarter compared with operating income of $13.4 million in the year-ago reported quarter. The loss was owing to lower gross profit, partially offset by lower personnel and technology costs.
Truckload revenues fell 17% to $196 million. Excluding fuel surcharge revenues, segmental revenues fell 18% owing to a 22% decline in segment gross revenue per load excluding fuel surcharge revenue, partially offset by a 6% increase in load volume. At the third-quarter end, total tractors and trailers were 1,989 and 15,031 compared with the year-ago quarter’s figures of 2,140 and 13,751, respectively.
Operating income fell 48% year over year to $7.7 million due to decline in revenue.
Final Mile Services revenues fell 15% year over year to $226 million due to general weakness in demand across many of the industry verticals served.
Operating income increased 33% year over year on the back of internal efforts to improve revenue quality and managing costs.
Liquidity & Buyback
J.B. Hunt exited the third quarter with cash and cash equivalents of $75.19 million compared with $295.92 million at the end of second-quarter 2023. Long-term debt was $1,195.70 million compared with $1,195.30 million at the end of second-quarter 2023.
In the third quarter of2023, JBHT purchased almost 267,000 shares for $51 million. As of Sep 30, 2023, JBHT had approximately $416 million remaining under its share repurchase authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -11.62% due to these changes.
VGM Scores
Currently, JB Hunt has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise JB Hunt has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
