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J.B. Hunt (JBHT) Down 3.3% Since Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for J.B. Hunt Transport Services, Inc. JBHT. Shares have lost about 3.3% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

First Quarter Earnings

J.B. Hunt's earnings of $0.92 per share beat the Zacks Consensus Estimate of $0.87. Total operating revenues increased 6.5% year over year to $1,629 million, narrowly missing the Zacks Consensus Estimate of $1,631.4 million. Operating income in the first quarter decreased 11.3% to $149 million. Lower customer rates hurt results.

The effective income tax rate in the first quarter of 2017 declined to 28% from 38% a year-ago due to a one-time after tax benefit of $13.6 million (12 cents per share). The company expects a tax rate of 35% for full-year 2017.

Segmental Performance

The Intermodal division reported quarterly revenues of $937 million, up 5% year over year. Load volumes in the segment climbed 2%. Revenue per load increased 3%. Operating income decreased 8% year over year to $95 million.

Dedicated Contract Services revenues grew 10% year over year to $392 million. The company added new trucks to the fleet and customer retention rates remained above 98%. Operating income was flat at $45 million, as the positive impact of higher revenues and improved asset utilization were offset by higher costs.

Integrated Capacity Solutions revenues surged 14% year over year to $209 million on the back of 36% increase in load volumes. On a year-over-year basis, revenue per load plunged 16%. Operating income declined 59% to $4.5 million due to lower gross profit margin and higher costs.

Truck revenues decreased 2% to $94 million primarily due to lower revenue per load. At the end of the first quarter, the company operated 2,144 tractors, down from the figure at the end of 2016. Operating income decreased 46% to $4.9 million due to lower customer rates per miles.

Liquidity

At the end of the first quarter of 2017, cash and cash equivalents were $12.3 million compared with approximately $6.4 million at the end of 2016.  Long-term debt was $950.6 million compared with $986.3 million at the end of 2016.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. While looking back an additional 30 days, we can see even more downside. There have been six downward revisions in the last two months.

J.B. Hunt Transport Services, Inc. Price and Consensus

 

J.B. Hunt Transport Services, Inc. Price and Consensus | J.B. Hunt Transport Services, Inc. Quote

VGM Scores

At this time, J.B. Hunt's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum 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  'A'. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift.. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.


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