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Why Is JB Hunt (JBHT) Up 3.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for JB Hunt (JBHT - Free Report) . Shares have added about 3.5% 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 the 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's earnings of $1.14 per share surpassed the Zacks Consensus Estimate by 31 cents. The bottom line, however, declined 16.8% year over year due to the disappointing performance of its intermodal unit. Moreover, total operating revenues declined 5.1% to $2,145.6 million. Revenues, however, surpassed the consensus mark of $2,060.9 million.
Total operating revenue, excluding fuel surcharge revenue, decreased 0.5% year over year. The top line was hurt by a 2% and 11% volume decline in the JBI and Integrated Capacity Solutions (ICS) units, respectively apart from 5% fewer stops in Final Miles Services (FMS). However, the 17% increase in loads in Truckload (JBT) was a bright spot.
Quarterly operating income (on a reported basis) declined 9.3% to $175.2 million hurt by the $4.6 million additional charges for uncollectible customer accounts. Operating expenses declined 4.6% year over year primarily owing to lower insurance and claims costs, and reduced expenses on travel and entertainment costs.
Segmental Highlights
The Intermodal division generated quarterly revenues of $1.07 billion, down 7% year over year. Segmental volumes were hurt by coronavirus-related disruptions, particularly in April. Moreover, operating income dipped 14% to $107 million due to lower volumes, higher rail purchased transportation costs, and inefficiencies in the network.
Revenues at the Dedicated Contract Services (DCS) segment inched down 1% year over year to $533 million. However, operating income rose 9% year over year to $83.1 million owing to lower driver turnover, travel and entertainment, and safety related expenses.
Integrated Capacity Solutions (ICS) revenues declined 9% year over year to $304 million due to the double-digit volume decline. However, revenue per load increased 2%. The segment’s operating loss in the quarter widened year over year to $13.1 million.
Truck (JBT) revenues inched up 9% to $108.3 million, primarily owing to 17% increase in load count. At the end of the second quarter, total tractors were 1,897 (of which 800 were company owned) compared with 1,879 in the year-ago quarter. Meanwhile, operating income dropped 61% to $3.5 million due to escalated costs pertaining to purchased transportation, increased investments in technology among other factors.
FMS revenues declined 2% to $140 million, due to coronavirus-induced disruption in operations. The segment’s operating loss narrowed from $15.8 million a year ago to $5.2 million owing to the absence of the $20 million pre-tax claim settlement incurred in 2019.
Liquidity & Buybacks
The company exited the second quarter with cash and cash equivalents of $275 million compared with $35 million at the end of 2019. Long-term debt was $1.3 billion compared with $1.29 billion at 2019 end. Net capital expenditures in the first half of 2020 was $265 million compared with $475 million in first-half 2019.
During the quarter, J.B. Hunt did not buy back any share. The company has approximately $520 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 review have trended upward during the past month. The consensus estimate has shifted 7.97% due to these changes.
VGM Scores
At this time, JB Hunt has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, 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 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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Why Is JB Hunt (JBHT) Up 3.5% Since Last Earnings Report?
It has been about a month since the last earnings report for JB Hunt (JBHT - Free Report) . Shares have added about 3.5% 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 the 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's earnings of $1.14 per share surpassed the Zacks Consensus Estimate by 31 cents. The bottom line, however, declined 16.8% year over year due to the disappointing performance of its intermodal unit. Moreover, total operating revenues declined 5.1% to $2,145.6 million. Revenues, however, surpassed the consensus mark of $2,060.9 million.
Total operating revenue, excluding fuel surcharge revenue, decreased 0.5% year over year. The top line was hurt by a 2% and 11% volume decline in the JBI and Integrated Capacity Solutions (ICS) units, respectively apart from 5% fewer stops in Final Miles Services (FMS). However, the 17% increase in loads in Truckload (JBT) was a bright spot.
Quarterly operating income (on a reported basis) declined 9.3% to $175.2 million hurt by the $4.6 million additional charges for uncollectible customer accounts. Operating expenses declined 4.6% year over year primarily owing to lower insurance and claims costs, and reduced expenses on travel and entertainment costs.
Segmental Highlights
The Intermodal division generated quarterly revenues of $1.07 billion, down 7% year over year. Segmental volumes were hurt by coronavirus-related disruptions, particularly in April. Moreover, operating income dipped 14% to $107 million due to lower volumes, higher rail purchased transportation costs, and inefficiencies in the network.
Revenues at the Dedicated Contract Services (DCS) segment inched down 1% year over year to $533 million. However, operating income rose 9% year over year to $83.1 million owing to lower driver turnover, travel and entertainment, and safety related expenses.
Integrated Capacity Solutions (ICS) revenues declined 9% year over year to $304 million due to the double-digit volume decline. However, revenue per load increased 2%. The segment’s operating loss in the quarter widened year over year to $13.1 million.
Truck (JBT) revenues inched up 9% to $108.3 million, primarily owing to 17% increase in load count. At the end of the second quarter, total tractors were 1,897 (of which 800 were company owned) compared with 1,879 in the year-ago quarter. Meanwhile, operating income dropped 61% to $3.5 million due to escalated costs pertaining to purchased transportation, increased investments in technology among other factors.
FMS revenues declined 2% to $140 million, due to coronavirus-induced disruption in operations. The segment’s operating loss narrowed from $15.8 million a year ago to $5.2 million owing to the absence of the $20 million pre-tax claim settlement incurred in 2019.
Liquidity & Buybacks
The company exited the second quarter with cash and cash equivalents of $275 million compared with $35 million at the end of 2019. Long-term debt was $1.3 billion compared with $1.29 billion at 2019 end. Net capital expenditures in the first half of 2020 was $265 million compared with $475 million in first-half 2019.
During the quarter, J.B. Hunt did not buy back any share. The company has approximately $520 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 review have trended upward during the past month. The consensus estimate has shifted 7.97% due to these changes.
VGM Scores
At this time, JB Hunt has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, 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 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.