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J.B.Hunt (JBHT) Underperforms Market in a Year: Here's Why

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 Shares of  J.B.Hunt  Transport Services, Inc. (JBHT - Free Report) have lost 2.4% against the industry's 8.4% rise in a year’s time. The unfavorable performance was caused by escalating operating expenses and disappointing performance in the truck segment.

Let’s take a look at the factors that are responsible for the dismal price performance.

Acquisition-related costs and high operating expenses — including increased wages for drivers as well as rail purchased transportation costs  are limiting bottom-line growth. Moreover, driver shortages are hurting the company’s operations for quite some time. Notably, operating expenses increased  6.3% in 2019.

Sluggish freight scenario is affecting volumes in the Truck segment. Truck revenues plunged 6.7% in 2019 due to lower loads and soft truck pricing. Consistent below-par performance in this unit will likely hurt the stock.

Moreover, J.B. Hunt is a highly-leveraged company with its debt-to-equity ratio (expressed as a percentage) currently at 57.2 compared with the industry’s 20.2. This implies that the company is funding most of its ventures with debt.

Also, the company has a below- par track record with respect to earnings per share (EPS), having underperformed the Zacks Consensus Estimate in three of the last four quarters. The company reported better-than-expected EPS in the other quarter. The company has trailing four-quarter negative earnings surprise of 6.3%, on average.

Negative Estimate Revisions and Weak Momentum  Score

The negativity revolving around the stock is evident from the Zacks Consensus Estimate for the current year earnings being revised downward by 6% in the past 60 days to $5.6.

The company’s Momentum Score of D further highlights its short-term unattractiveness.

Additionally, J.B.Hunt carries a Zacks Rank #4 (Sell).

 Stocks to Consider

Few better-ranked stocks in the transportation sector are Delta Air Lines (DAL - Free Report) , Ryanair Holdings (RYAAY - Free Report) and Azul S.A (AZUL - Free Report) . Delta Airlines carries a Zacks Rank#2 (Buy), while Ryanair and Azul sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Delta Air Lines , Ryanair and  Azul  have rallied more than 6%, 5% and 17%, respectively, in a year.

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