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Will Intermodal Revenues Aid J.B. Hunt's (JBHT) Q2 Earnings?

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J.B. Hunt Transport Services Inc. (JBHT - Free Report) is slated to report second-quarter 2018 results on Jul 16.

Last reported quarter, the company delivered a negative earnings surprise of 1.8%. This transportation company’s earnings of $1.07 per share fell short of the Zacks Consensus Estimate by 2 cents. However, the bottom line improved 16.3% on a year-over-year basis despite higher operating expenses. In fact, the 19.6% year-over-year increase in revenues to $1,948.2 million aided results. The top line also cruised ahead of the Zacks Consensus Estimate of $1,872.1 million.

However, things seem to be looking up for the company in the second quarter. Shares of the company have gained 3.8% in the Apr-Jun period, outperforming the industry’s 0.6% rise.


Why a Likely Positive Surprise?

Our proven model shows that J.B. Hunt is likely to beat on earnings this quarter because it has the perfect combination of the following two key ingredients:

Zacks ESP: J.B. Hunt has an Earnings ESP of +0.95%. This is because the Most Accurate estimate is pegged at $1.28 per share while the Zacks Consensus Estimate stands marginally lower at $1.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: J.B. Hunt currently carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have significantly higher chances of beating estimates.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

What is Driving This Better-than-Expected Earnings?

Volume growth at the company’s primary division — intermodal — is anticipated to drive results in the second quarter. The Zacks Consensus Estimate for second-quarter intermodal revenues stands at $1,119 million, above $1,070 million reported in the previous quarter.

The Dedicated Contract Services (DCS) and Integrated Capacity Solutions (ICS) are also expected to perform well in the quarter to be reported, thus boosting the top line. The consensus mark for DCS revenues is pegged at $506 million, higher than $494 million reported in the first quarter. The same for ICS is $308 million, more than $296 million in the preceding quarter.

However, high costs might affect the company’s bottom line in the second quarter. The company’s high leverage ratio could also be a dampener.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also check out some other stocks worth considering like United Parcel Service, Inc. (UPS - Free Report) , Union Pacific Corporation (UNP - Free Report) and CSX Corporation (CSX - Free Report) as these too possess the right combination of elements to come up with an earnings beat in their next releases.
UPS has an Earnings ESP of +1.74% and a Zacks Rank #3. The company will report second-quarter earnings on Jul 25.

Union Pacific has an Earnings ESP of +1.46% and a Zacks Rank of 3. The company is scheduled to announce second-quarter earnings on Jul 19.

CSX has an Earnings ESP of +2.17% and a Zacks Rank of 2. The company will release second-quarter earnings on Jul 17. You can see the complete list of today’s Zacks #1 Rank stocks here.

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