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What's in Store for J.B. Hunt (JBHT) This Earnings Season?

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J.B. Hunt Transport Services, Inc. (JBHT - Free Report) is expected to report fourth-quarter 2018 results on Jan 17, after market close.

In the third quarter, the company delivered impressive results, with earnings and revenues beating the Zacks Consensus Estimate. The bottom line was favored by a lower effective tax rate. Also, the top line improved on a year-over-year basis.

J.B. Hunt has an impressive earnings surprise history. The company’s earnings beat estimates in three of the trailing four quarters, the average being 2.8%.

Factors at Play

J.B. Hunt is expected to perform well in the fourth quarter on the back of high freight rates from strong shipping demand. The current tax law, which reduces corporate tax rate significantly, has been boosting the company’s results since its implementation in 2017. The significant cut in corporate tax rate is likely to boost cash flow, which is expected to drive the bottom line in the to-be-reported quarter.

Furthermore, consistent strength in the company’s Intermodal, Dedicated Contract Services (DCS) and Integrated Capacity Solutions (ICS) segments are expected to boost top-line results in the fourth quarter. The Zacks Consensus Estimate for fourth-quarter intermodal revenues is pegged at $1,260 million, which compares favorably with $1,098 million reported in the prior-year quarter.

The consensus mark for DCS revenues is pegged at $577 million, reflecting a rise from $477 million in the year-ago quarter. Similarly, the consensus estimate for ICS revenues is pegged at $386 million, higher than $323 million in the year-ago quarter.

However, J.B. Hunt has been struggling with driver shortages for quite some time. Escalating operating expenses due to increased driver wages are expected to dent bottom-line results in the to-be-reported quarter.

Additionally, we are concerned about the company’s high debt levels.

Earning Whispers

Our proven model does not show an earnings beat for J.B. Hunt this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as elaborated below.

Zacks Rank: J.B. Hunt carries a Zacks Rank #3.

Earnings ESP: J.B. Hunt has an Earnings ESP of -0.60%. The Most Accurate Estimate is at $1.49 per share, lower than the Zacks Consensus Estimate of $1.50. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the Zacks Transportation sector may check out other companies with the right combination of elements to beat estimates in the upcoming releases:

ArcBest Corporation (ARCB - Free Report) has an Earnings ESP of +3.92% and a Zacks Rank #1. The company will release fourth-quarter 2018 results on Jan 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allegiant Travel Company (ALGT - Free Report) has an Earnings ESP of +16.26% and a Zacks Rank #2. The company will release fourth-quarter 2018 results on Jan 30.

SkyWest, Inc. (SKYW - Free Report) has an Earnings ESP of +3.50% and a Zacks Rank #3.  The company will release fourth-quarter 2018 results on Jan 31.

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