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J.B. Hunt (JBHT) to Report Q1 Earnings: What's in Store?

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J.B. Hunt Transport Services, Inc. (JBHT - Free Report) is expected to report first-quarter 2019 results on Apr 15.

Last reported quarter, the company delivered an earnings surprise of 19.6%. Quarterly revenues also surpassed estimates. While the bottom line declined year over year on increased costs from the arbitration with BNSF Railway Company, the top line improved year over year owing to a strong segmental performance.

However, things don’t look up for the company this soon-to-be-reported quarter. As an evidence the Zacks Consensus Estimate for first-quarter earnings has been revised 3.8% downward in the last 60 days.

Factors Likely at Play

High operating expenses due to increased driver wages have been hampering bottom-line growth for quite some time now and the first quarter is likely to be no exception. The increased wages are primarily aimed at retaining drivers amid their scarcity.

Additionally, rising operating costs might lead to deterioration in operating ratio (operating expenses as a percentage of revenues), a key measure of operational efficiency.

However, J.B. Hunt is benefiting from high freight rates on the back of strong shipping demand. Moreover, an impressive segmental performance is likely to boost the company’s top line.

The Zacks Consensus Estimate for Dedicated Contract Services segment revenues in the first quarter stands at $607 million, higher than $494 million reported in the year-ago period.

The consensus mark for Integrated Capacity Solutions revenues is pegged at $310 million, above the reported figure of $296 million reported in the first quarter of 2018.

The same for intermodal revenues stands at $1,210 million compared with $1,070 million reported in the prior-year quarter.

Meanwhile, the consensus estimate for truck revenues is pegged at $106 million, up from $93 million reported in the year-earlier period.

Further, the company’s Cory 1st Choice Home Delivery acquisition completed this February, which has strengthened its Final Mile operations, is likely to bolster results in the first quarter.

Earnings Whispers

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

Earnings ESP: J.B. Hunt has an Earnings ESP of -4.02. This is because the Most Accurate Estimate is pegged at $1.23, per share lower than the Zacks Consensus Estimate of $1.28. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: J.B. Hunt has a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP as well to be confident about an earnings surprise. Thus, a negative Earnings ESP in this case leaves the surprise prediction inconclusive.

We caution against all 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 broader Transportation sector may consider Air Lease Corporation (AL - Free Report) , Ryder System, Inc. (R - Free Report) and SkyWest, Inc. (SKYW - Free Report) as these stocks possess the right combination of elements to beat on earnings in the next releases.

Air Lease has an Earnings ESP of +4.41% and a Zacks Rank of 3. The company will report first-quarter results on May 9.

Ryder has an Earnings ESP of +3.44% and is a Zacks #3 Ranked stock. The company is set to release first-quarter earnings numbers on Apr 30.

SkyWest has a Zacks Rank #2 and an Earnings ESP of +0.83%. The company is scheduled to report first-quarter financial numbers on Apr 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

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