It has been about a month since the last earnings report for JB Hunt (JBHT). Shares have added about 5% 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 catalysts.
Earnings Beat at J.B. Hunt in Q3
J.B. Hunt Transport Services' third-quarter 2024 earnings per share of $1.49 outpaced the Zacks Consensus Estimate of $1.42 but declined 17.2% year over year.
Total operating revenues of $3.07 billion surpassed the Zacks Consensus Estimate of $3.04 billion but declined 3% year over year. The downfall was owing to a 5% and 6% decrease in gross revenue per load in Intermodal (JBI) and Truckload (JBT), respectively, a decline in load volume of 10% and 6% in Integrated Capacity Solutions (ICS) and Dedicated Contract Services (DCS), respectively, and 6% fewer stops in Final Mile Services (FMS). These were partially offset by JBI load growth of 5%, which included growth in both the transcontinental and eastern networks and a 3% increase in revenue per load in ICS. Total operating revenues, excluding fuel surcharge revenue, decreased less than 1% from the year-ago reported quarter.
Operating income for the reported quarter decreased 7% year over yearto $224.1 million. The downfall was owing to lower revenues in all segments excluding JBI, and higher personnel-related, insurance and claims, and equipment-related expenses.
Segmental Highlights
Intermodal division generated quarterly revenues of $1.56 billion, flat year over year. JBHT witnessed solid demand for its Intermodal service throughout the quarter across both the transcontinental and eastern networks, aided by seasonal activity and strong performance from rail providers. Demand was solid on eastbound transcontinental loads out of Southern California which increased by a double-digit percentage from the prior-year quarter.
Transcontinental network loads increased 7% year over year, while eastern network loads increased 3% year over year.
Operating income decreased 13% year over yearowing to lower yields, which was only partially offset by the resulting impact of absorbing network and equipment costs with higher volume.
Dedicated Contract Services segment revenues fell 5% from the year-ago period to $846 million, owing to a 3% decline in average trucks and a 3% decline in productivity (revenue per truck per week).
Operating income fell 7% year over year owing to lower revenues, higher insurance and claims and new-account start-up costs. These were partially offset by lower personnel, bad debt and equipment-related expenses and the maturing of new business onboarded over the trailing 12 months.
Integrated Capacity Solutions revenues decreased 7% year over year to $278 million. Segmental volumes decreased 10% year over year. Revenue per load increased 3% year over year owing to increases in both contractual and transactional rates, as well as changes in customer mix.
In the reported quarter, JBHT reported an operating loss of $3.3 million compared with an operating loss of $9.4 million in the third quarter of 2023. The decrease in operating loss was owing to an $11.7 million increase in gross profit and lower cargo claims and personnel-related expenses, partially offset by integration and transition costs related to the purchase of the brokerage assets of BNSF Logistics.
Truckload revenues fell 12% year over year to $173 million. Excluding fuel surcharge revenues, segmental revenues fell9% due to a 6% decline in load volume and a 3% decline in gross revenue per load excluding fuel surcharge revenue.
At the third-quarter end, total tractors were 1,989, which remained flat year over year. Trailers were 13,205 compared with the year-ago quarter’s figure of 13,409.
Operating income grew 6% year over year owing to the improved network balance and lower trailing capacity costs.
Final Mile Services revenues fell 3% year over year to $218 million due to general weakness in demand across many of the end markets served. The decline in revenues was partially offset by multiple new customer contracts implemented over the trailing 12 months and improved revenue quality on the overall business portfolio.
Operating income fell 7% year over year owing to the decline in segment revenues, along with higher purchased transportation costs and insurance premiums, partially offset by lower personnel-related expenses.
Liquidity & Buyback
J.B. Hunt exited the third quarter with cash and cash equivalents of $120 million compared with $53.50 million at the prior-quarter end. Long-term debt was $1.03 billion compared with $1.48 billion at the end of the prior quarter.
In the third quarter of 2024, JBHT purchased almost 1,200,000 shares for $200 million. As of Sept. 30, 2024, JBHT had approximately $967 million remaining under its share repurchase authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, JB Hunt has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly 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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