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The Zacks Analyst Blog Highlights: UPS, JB Hunt, Old Dominion, Arkansas Best and Covenant Transportation

UPS JBHT ODFL ABFS CVTI

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For Immediate Release

Chicago, IL – July 16, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include UPS ((UPS - Analyst Report)-Free Report), JB Hunt ((JBHT - Analyst Report)-Free Report), Old Dominion ((ODFL - Snapshot Report)-Free Report), Arkansas Best ((ABFS - Snapshot Report)-Free Report) and Covenant Transportation ((CVTI - Snapshot Report)-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday’s Analyst Blog:

Are Trucker Profits Signaling a Market U-Turn?

Friday’s profit warning from UPS ((UPS - Analyst Report)-Free Report) and today’s earnings shortfall from JB Hunt ((JBHT - Analyst Report)-Free Report) put the transport sector in the spotlight. The results may cause a review of the profit outlook in the freight/transportation sector, and the market to think about making a U-turn.   UPS noted its profits had been hurt by customers trading down to lower cost shipment methods, slower industrial production, and overcapacity in the airfreight market.    The slowdown in international business is not surprising given soft export growth numbers from China and India, and continued sluggish economic growth in Europe.  JB Hunt reported that its truck segment saw a 20% drop in revenues due to a smaller fleet and lower utilization.   The profit results prompt an examination of the Cass Shipping index, which monitors freight shipment volume, for insight into the transportation industry’s health.

Shipment and economic activity are slow:

The Cass Shipment index displayed strength in Q2 relative to Q1 averaging 1.12 compared to 1.08, but the three month average of the year over year change in the Index was -1.0% in June compared to +0.7% at the end of March.  Growth in shipment activity has been relatively flat since the summer of 2011 and does not appear to have strong forward momentum.  Despite the economic expansion, the Federal Reserves’ index of industrial production has not exceeded the peak prior to the Great Recession in late 2007.  Further, the manufacturing index has been flat to lower since February 2013, showing a pause in growth.  The pace of economic activity has not been helpful to the freight sector and it is not surprising that UPS and JB Hunt disappointed investors with their profit results.  

The market is optimistic on earnings:

Old Dominion ((ODFL - Snapshot Report)-Free Report), Arkansas Best ((ABFS - Snapshot Report)-Free Report) and Covenant Transportation ((CVTI - Snapshot Report)-Free Report) have a Zacks Rank #2 (Buy).  None of the four companies had seen their EPS estimates reduced in the past 30 days.  The agreement among analysts leans constructive for the profit outlook and runs against the recent profit warning from UPS and the short fall from JB Hunt.  Arkansas Best has seen the strongest movement in EPS forecasts.   The enthusiasm toward the sector seems misplaced based on the most recent data points.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
 

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