J.B. Hunt Transport Services ( JBHT - Analyst Report ) , the third-largest U.S. truckload carrier, reported third quarter 2011 earnings of 57 cents per share, which surpassed the Zacks Consensus Estimate by a penny. Earnings per share soared 39.0% from 41 cents earned in the year-ago quarter on strong growth across most segments.

Total revenue increased 18.8% year over year to $1.17 billion, but came in below the Zacks Consensus Estimate of $1.18 billion. The year-over-year growth was aided by higher shipment in each of the segments. Operating income leaped 30% year over year to $118.7 million attributable to strong profits in three segments –– Intermodal, Dedicated Contract Services and Integrated Capacity Solutions.

Segment Results

Intermodal reported revenue of $691.3 million, up 24.0% year over year driven by a 15% increase in load count. Higher fuel surcharges and capacity constrains, particularly in the southeast truck market also aided revenue growth. Excluding fuel surcharges, pricing increased 4.0% year over year. The average tractor count increased to 3,057 from 2,610 in the year-ago quarter. Operating income climbed 30% year over year to $78.4 million.

Dedicated Contract Services revenues grew 16% year over year to $269.0 million driven by strong growth in truck count from new contracts. The average truck count was 4,917 as against 4,499 in the year-ago quarter. Operating income increased 34.0% from the year-earlier quarter to $29.7 million on cost control, increased truck count and higher productivity.

Truck revenues climbed 2.0% year over year to $127 million despite a 7.0% reduction in tractors. The average tractor count decreased to 2,569 from 2,797 in the year-ago quarter. Overall, the rates continued to improve with a 3.0% year-over-year growth registered in the quarter. However, the average length of haul declined 4.2%. Operating income increased 4% year over year to $6.8 million.

Integrated Capacity Solutions revenues grew 21.0% year over year to $93.2 million attributable to an 14% increase in load volume, higher pricing in both contractual and transactional businesses as well as an increase in fuel surcharges. Operating income shot up 43% year over year to $3.8 million. On a year-over-year basis, the carrier base rose 15.5% and employee count grew 11.8%.

Liquidity

At September 30, 2011, cash and cash equivalents of J.B. Hunt remained flat with year-end 2010 at $7.7 million. Total debt increased to $768 million from $649.0 million at the end of the year-ago quarter.

Capital expenditure was $324 million as of September 30, compared with $145 million at the end of the year-ago quarter.

Share Repurchase

J.B. Hunt repurchased 6 million shares for a total of $246 million during the nine-month period ending September 30. The company has $3 million remaining in the share repurchase authorization.

Our Analysis

We believe J.B. Hunt continues to gain market share across all segments, particularly in Intermodal, Dedicated Contract Services and Integrated Capacity Solutions that delivered record high results. Despite the economic upheaval, these segments have a strong foothold in their respective markets. Additionally, the company remains positive on Integrated Capacity Solutions given its continued growth despite depressed margin due to unfavorable market fundamentals.

However, the company faces intense competition from other truckload carriers such as YRC Worldwide Inc. ( YRCW - Snapshot Report ) , Old Dominion Freight Line Inc. ( ODFL - Snapshot Report ) and Conway Inc. ( CNW - Snapshot Report ) due to its low barriers to entry. Additionally, rapidly rising fuel costs and tightening of capacity in the Truck market amid truck load conversion to rail intermodal may affect the company’s performance ahead.

Consequently, we are maintaining our long-term Neutral recommendation on J.B. Hunt with a Zacks Rank # 3 (Hold).