Yahoo News JB Hunt (JBHT) Down 2.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for JB Hunt (JBHT). Shares have lost about 2.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is JB Hunt due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Earnings Miss at J.B. Hunt in Q1
J.B. Hunt Transport Services’ first-quarter 2023 earnings of $1.89 per share missed the Zacks Consensus Estimate of $2.04 and declined 17.5% year over year.
Total operating revenues of $3,229.58 million also lagged the Zacks Consensus Estimate of $3,434.4 million and fell 7.4% year over year. The downfall was due to declines in the volume of 25% in Integrated Capacity Solutions (ICS), 5% in Intermodal (JBI) and 17% in Final Mile Services (FMS), and a 17% decline in revenue per load in Truckload (JBT). Revenue declines in ICS, JBI, FMS and JBT were partially offset by Dedicated Contract Services (DCS) revenue growth of 13%.
Total operating revenues, excluding fuel surcharges, decreased 10.2% year over year.
Operating income for the first quarter decreased 17% year over yearto $277.5 million, owing to lower volumes and pressure on customer rate and cost recovery efforts across ICS, JBI and JBT.
Net interest expense for the first quarter increased 17.5% year over yeardue to higher effective interest rates, partially offset by a slightly lower consolidated debt balance.
Operating expenses fell 6.4% to $2,952.09 million.
On Jan 1, 2023, J.B. Hunt transferred most of JBT’s company-owned trucking operations to DCS and transferred its less-than-truckload brokerage operations from ICS to FMS.
Segmental Highlights
Intermodal division generated quarterly revenues of $1.54 billion, down 4% year over year, owing to a 5% decrease in volume. Gross revenue per load grew 1%, resulting from changes in the mix of freight, customer rates and fuel surcharge revenues. Revenue per load, excluding fuel surcharge revenue, was flat year over year.Eastern network loads increased 1%, while transcontinental loads fell 9%.
Operating income fell 16% year over yearin the first quarter due to lower volumes and the resulting impact on tractor and trailing utilization trends.
Dedicated Contract Services segment revenues rose 13% from the year-ago period to $879 million due to a 7% increase in average revenue producing trucks and a 5% increase in productivity (revenue per truck per week) versus the prior period. The company’s fleet, at the end of the quarter, had 541 more revenue-producing trucks (on a net basis) versus a year ago.
Operating income grew 29% year over yeardue to higher revenues, driven by greater productivity and utilization of assets, contracted indexed-based price escalators, and the maturing of new business onboarded over the trailing 12 months.
Integrated Capacity Solutions revenues decreased 42% year over year to $385 million. Segmental volumes decreased 25%. Revenue per load fell 22% due to changes in the customer freight mix and lower contractual and transactional rates in the company’s truckload business.
JBHT reported an operating loss of $5.4 million against the operating income of $24.2 million in the year-ago quarter. The loss wasowing to lower gross profit and higher insurance-related expenses, partially offset by lower personnel-related expenses and reduced technology costs.
Truckload revenues fell 10% to $206 million. Excluding fuel surcharge revenues, segmental revenues fell 15% year over year, owing to a 22% decline in revenue per load, partially offset by an 8% increase in load volume. At the first-quarter end, total tractors and trailers were 2,162 and 14,935 compared with the year-ago quarter’s figures of 1,624 and 11,655, respectively.
Operating income fell 83% year over year to $5 million due to a decline in revenue per load, higher insurance-related costs.
Final Mile Services revenues fell 4% year over year to $225 million due to weak demand across many of the industry verticals served. The revenue decline was partially offset by the previously announced acquisition of Zenith Freight Lines, LLC and multiple new customer contracts implemented over the trailing 12 months, along with improved revenue quality at underperforming accounts.
Operating income increased $6.0 million from the prior-year quarter due to internal efforts to improve revenue quality and manage costs.
Liquidity & Buyback
J.B. Hunt exited the first quarter with cash and cash equivalents of $52.60 million compared with $51.93 million at the end of fourth-quarter 2022. Long-term debt was $991.71million compared with $1,261.73 million at the end of fourth-quarter 2022.
Net capital expenditures for the first quarter were $379.83 million compared with $289.12 million in the year-ago period.
In the first quarter of 2023, JBHT purchased almost 183,000 shares for $31 million. As of Mar 31, 2023, JBHT had approximately $520 million remaining under its share repurchase authorization.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -8.42% due to these changes.
VGM Scores
At this time, JB Hunt has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. 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 A. 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. 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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J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
