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Bear of the Day: J.B. Hunt Transport Services (JBHT)

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J.B. Hunt Transport Services (JBHT - Free Report) is a Zacks Rank #5 (Strong Sell) that is a provider of a broad range of transportation services to a diverse group of customers.

The stock has drifted sideways over the last few years, but a recent earnings report has JBHT trading at the bottom of its multi-year range.

After the sixth straight EPS miss, investors might give up on the name, bringing the stock much lower over the short term.

About the Company

J.B. Hunt was founded in 1961 and is headquartered in Lowell, Arkansas. The company employs over 34,000 people and operates through five segments: Intermodal (JBI), Dedicated Contract Services (DCS), Integrated Capacity Solutions (ICS), Final Mile Services (FMS), and Truckload (JBT). The JBI segment offers intermodal freight solutions

JBHT is valued at $17 billion and has a Forward PE of 25. The stock holds Zacks Style Scores of “B” in Growth, but “D” in Value. The stock pays a dividend of just over 1%.


Q1 Earnings

Last week J.B. Hunt reported a Q1 miss of 20%. Revenues came in at $2.94B versus the $3.12B expected as overall demand for intermodal service offerings was weaker than expected.

While intermodal revenue was down 9% from last year, Integrated Capacity Solutions revenue took the biggest year-over-year hit, down 26%.

Management blamed competition from over-the-road truck options in the eastern network, as well as the company’s disciplined approach to the market for the value. Management also cited inflationary cost pressures and said that customers continue to feel pressure in their business.

This was the sixth straight surprise to the downside for JBHT, but the market has given the stock a break almost every time. However, with analysts dropping numbers aggressively since EPS, will investors finally capitulate?

Earnings Estimates

Over the 7 days, earnings estimates have come down across all time frames.

For the current quarter, analysts have dropped estimates from $1.89 to $1.62, or 14%.

For the next quarter, estimates have been lowered by 10%.

For the current year, we see an 11% drop, with estimates falling from $7.61 to $6.76

The drop in estimates is beginning to look like a larger trend. Looking at a long-term term time frame, we see that next year's estimates have fallen 9% over the last 90 days, going from $9.58 to $8.72.

Analysts are also lowering price targets. Some more notable names include UBS going from $234 to $211 and Barclays dropping to $170 from $200.

Technical Take

When you look at a chart from 2021, we see a range from $160- 200, with the stock seeing a couple of false breakouts above that $200 figure.

$160 is a big support level long-term, so some investors likely will want to buy the current dip. This level has held up about ten times over the last three years, but if it were to break, we might see some panic selling.

The stock is trading below all its moving averages and took out 2023 lows. This isn’t a positive sign when the overall stock market has rallied significantly. If that $160 level were to break, the $130 level could be in play. This is the 61.8% Fibonacci retracement from COVID lows to all-time highs. This move would be another 20% lower from here so investors should be patient or simply avoid the stock altogether.

In Summary

The trucking industry is going through some hurdles in the current economic environment, with one such hurdle being inflationary pressure. J.B. Hunt is also experiencing competition issues, which is hurting revenues.

Until the company can manage the issues, investors should look elsewhere.

For those interested in the space, a better option might be XPO (XPO - Free Report) . The stock is a Zacks Rank #2 (Buy) that is coming off a 26% EPS beat and trading close to 2024 highs.  


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