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JB Hunt (JBHT) Up 2.9% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for JB Hunt (JBHT - Free Report) . Shares have added about 2.9% in that time frame, outperforming 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 Q1

J.B. Hunt’s quarterly earnings of $2.29 per share surpassed the Zacks Consensus Estimate of $1.91. The bottom line surged 67.2% year over year on the back of higher revenues across all segments.

Total operating revenues of $3,488.6 million also outperformed the Zacks Consensus Estimate of $3,260.5 million. The top line jumped 33.3% year over year. Total operating revenues, excluding fuel surcharges, rose 27.4% year over year.

Quarterly operating income (on a reported basis) climbed 61% to $334.29 million due to higher volumes, customer rate and cost recovery efforts. Operating expenses escalated 30.9%, primarily due to rising wages and truck purchase transportation costs.

Segmental Highlights

Intermodal division generated quarterly revenues of $1.60 billion, up 36% year over year. Revenue per load climbed 27.5% in the quarter underdiscussion. Volumes increased 7% year over year. While Eastern network loads ascended 10%, transcontinental loads rose 5%. Despite strong demand, volumes were affected by network fluidity challenges due to labor shortages and coronavirus-related disruptions. Operating income soared 87% year over year to $201 million, driven by higher customer rate and cost-recovery efforts.

Dedicated Contract Services segment revenues rose 28% from the year-ago period to $741 million, owing to fleet productivity improvement and an increase in average revenue-producing trucks. The company’s fleet, at the end of the quarter, had 2,221 more revenue-producing trucks (on a net basis) versus a year ago. Operating income increased 4% to $77.1 million.

Integrated Capacity Solutions revenues increased 29% year over year to $675 million. Segmental volumes climbed 12% from the year-ago period, with truckload volumes increasing 15%. Revenue per load climbed 14% owing to favorable customer freight mix, and higher contractual and spot rates. The segment’s operating income was $25 million in the reported quarter compared with $7.3 million in the first quarter of 2021.

Final Mile Services revenues ascended 8% year over year to $218 million due to the addition of multiple customer contracts over the last year and benefits from the acquisition of Zenith Freight Lines that closed in February end. The segment incurred an operating loss of $0.2 million against an operating income of $8.5 million in the year-ago quarter. The downside was due to high costs associated with driver wages and the acquisition of Zenith.

Truckload revenues soared 77% to $264 million. Excluding fuel surcharge revenues, segmental revenues rose 72% year over year due to 47% increase in revenue per load (excluding fuel surcharge revenue) and 17% rise in load count. At the end of the first quarter, total tractors and trailers were 2,236 and 11,655, respectively, compared with the year-ago quarter’s figures of 1,716 and 8,571.Truckload operating income skyrocketed more than 200% to $31.5 million on increased load counts and revenue per load.

Liquidity & Buyback

J.B. Hunt exited the first quarter with cash and cash equivalents of $144.53 million compared with $355.55 million at the end of December 2021. Long-term debt was $945.63 million compared with $945.26 million at 2021 end. Net capital expenditures for the first quarter were $289.13 million compared with $85.85 million in the year-ago period.

During the reported quarter, J.B. Hunt repurchased around 382,000 shares for approximately $75 million. The trucking company had approximately $276 million remaining under its share repurchase authorization at the end of the first quarter.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 5.16% due to these changes.

VGM Scores

Currently, JB Hunt has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 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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