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Here's Why You Should Retain J.B. Hunt (JBHT) Stock Now

J.B. Hunt Transport Services, Inc. JBHT is benefiting from its strong performances in the Dedicated Contract Services ("DCS") and Truckload segments. However, its weak cash position is worrisome.

Factors Favoring JBHT

Strong performances of the DCS and Truckload segments are driving J.B. Hunt’s top line. Revenues from the DCS segment rose 17.4% year over year in 2021 due to fleet productivity improvement and increase in average revenue-producing trucks, among other factors. The same climbed 31% year over year in 2022.

Increases in load count and revenue per load are supporting growth of the Truckload segment, revenues from which climbed 72% year over year in 2021. Truckload revenues rose 35.9% year over year in 2022.

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We are impressed by the company’s efforts to reward its shareholders through dividend payments and share repurchases. In January 2023, JBHT’s board of directors approved a dividend hike of 5%, thereby raising its quarterly cash dividend from 40 cents per share to 42 cents. The raised dividend was paid out on Feb 24 to all its shareholders of record as of Feb 10. The move reflected JBHT’s intention to utilize free cash to enhance its shareholders’ returns.

The company is also active on the buyback front, having resumed it in fourth-quarter 2020 after a temporary pause amid COVID-19 concerns. In 2021, J.B. Hunt repurchased shares worth $150 million. In the fourth quarter of 2022, J.B. Hunt did not repurchase any shares. The trucking company had approximately $551 million remaining under its share repurchase authorization as of Dec 31, 2022.

Key Risk

J.B. Hunt’s weak cash position is worrisome. JBHT's cash and cash equivalents were $51.93 million at the end of fourth-quarter 2022, much lower than the long-term debt of $1,261.73 million.

Zacks Rank & Key Picks

J.B. Hunt currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Transportation sector are American Airlines AAL and Alaska Air Group, Inc. ALK.

American Airlines, currently carrying a Zacks Rank #2 (Buy), is benefiting from the improved air-travel demand. In the fourth quarter of 2022, AAL reported earnings of $1.17 per share, surpassing the Zacks Consensus Estimate by 2.63%.

For first-quarter and 2023, AAL’s earnings are expected to register 100.4% and 332% growth, respectively, on a year-over-year basis.

Alaska Air, carrying a Zacks Rank #2 at present, is seeing continued improvement in air-travel demand. On the back of upbeat air-travel demand and favorable pricing, Alaska Air reported better-than-expected earnings per share for fourth-quarter 2022. ALK expects first-quarter 2023 total revenues to increase 29-32% from the first-quarter 2022 actuals.

For first-quarter and 2023, ALK’s earnings are expected to register 69.9% and 31.7% growth, respectively, on a year-over-year basis.

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J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report

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Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report

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