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Why Is JB Hunt (JBHT) Down 0.3% Since Last Earnings Report?

It has been about a month since the last earnings report for JB Hunt (JBHT). Shares have lost about 0.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is JB Hunt due for a breakout? 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 Miss at J.B. Hunt in Q1

J.B. Hunt Transport Services' first-quarter 2024 earnings of $1.22 per share missed the Zacks Consensus Estimate of $1.53 and declined 35.5% year over year.

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JBHT’s total operating revenues of $2,944 million missed the Zacks Consensus Estimate of $3,117.1 million and fell 8.8% year over year. Total operating revenues, excluding fuel surcharge revenue, fell 7% year over year. The downfall was owing to a 9% decrease in segment gross revenue per load in both Intermodal (JBI) and Truckload (JBT), 22% fewer loads in Integrated Capacity Solution (ICS), and a modest decline in average trucks and productivity in Dedicated Contract Services (DCS). Revenue declines in JBI, ICS, JBT and DCS were partially offset by Final Mile Services (FMS) revenue growth of 2%, primarily driven by new contracts implemented over the past year.

Operating income for the reported quarter fell 30% year over year to $194.4 million. The downfall was owing to a combination of lower volumes and yield pressure in JBI, ICS and JBT, as well as increases in equipment, insurance and claims, and bad debt expense.

Segmental Highlights

Intermodal division generated quarterly revenues of $1.40 billion, down 9% year over year. Revenue per load excluding fuel surcharge revenue was down 8% year-over-year. Transcontinental network loads increased 5% year over year, while eastern network loads decreased 7%.

Operating income fell 40% year over yearowing to lower yields.

Dedicated Contract Services segment revenues fell 2% from the year-ago period to $860 million owing to a 1% decline in average trucks combined with a 1% decline in productivity (gross revenue per truck per week).

Operating income fell 9% year over yearowing to lower revenues, increases in insurance premiums, equipment and bad debt expense. These were partially offset by lower maintenance costs and the maturing of new business onboarded over the past trailing twelve months.

Integrated Capacity Solutions revenues decreased 26% year over year to $285 million. Segmental volumes decreased 22%. Revenue per load decreased 5% owing to lower contractual and transactional rates and changes in customer freight mix.

JBHT reported an operating loss was $17.5 million in the reported quarter compared with operating loss of $5.4 million in the year-ago reported quarter. The loss was owing to a $11.0 million decrease in gross profit, higher insurance costs, and integration and transition costs related to the purchase of the brokerage assets of BNSF Logistics. These were partially offset by lower personnel-related expenses and reduced technology costs.

Truckload revenues fell 13% to $178 million. Excluding fuel surcharge revenues, segmental revenues fell13% due to a 9% decline in revenue per load excluding fuel surcharge revenue and a 5% decline in load volume.

At the reported-quarter end, total tractors and trailers were 1,933 and 13,306 compared with the year-ago quarter’s figures of 2,162 and 13,433, respectively.

Final Mile Services revenues grew 2% year over year to $229 million due to multiple new contracts implemented over the past year and efforts to improve the overall revenue quality of the business. These were partially offset by general weakness in demand across many of the end markets served.

Operating income increased 128% year over year owing to higher revenue and lower personnel, maintenance, and technology costs. These were partially offset by higher facility rent expense, insurance premiums, bad debt expense, and loss on equipment sales as compared to the prior year period.

Liquidity & Buyback

J.B. Hunt exited the first quarter with cash and cash equivalents of $64.18 million compared with $53.34 million at the end of prior quarter. Long-term debt was $1,366.51 million compared with $1,326.10 million at the end of prior quarter.

In the first quarter of 2024, JBHT purchased almost 126,000 shares for $25 million. As of Mar 31, 2024, JBHT had approximately $366 million remaining under its share repurchase authorization.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -16.93% due to these changes.

VGM Scores

At this time, JB Hunt has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise JB Hunt has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

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