JB Hunt Transportation Services is firing on all cylinders

A background is in JB Hunt Transportation Services

Supply chain challenges or not, JB Hunt Transportation Services (NASDAQ: JBHT) fires on all cylinders. The first quarter results reveal that the company is supported by three pillars of trucking, including volume, rates and fuel surcharges. The main takeaway from the report is that revenue and earnings are better than expected and we expect the company to continue to operate at this level (assuming of course the FOMC does not trigger a recession) as it pulls take advantage of organic growth and acquisition opportunities. The risk was in staffing, the need for drivers remains unchanged, but the company is slowly adding to its workforce.

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First Quarter 2022 Hedge Fund Letters, Talks and More

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“While global labor issues and other supply chain issues have continued, we have leveraged experience, focus and technology to navigate this period successfully. Our equipment utilization continues to underperform due to ongoing philosophy challenges and the continued need to hire new drivers… We added 1,889 net drivers in 2021 and have grown so far our driver strength of just over 1,400 this year. Our recruiting teams are built to levels not seen before in our history,” CEO John Roberts said on the conference call.

JB Hunt exceeds expectations in the first quarter of 2022

JB Hunt put in a solid performance despite the need for pilots. The company reported consolidated revenue of $3.49 billion, a 33.2% gain over last year. Revenue was driven by strong performance across all segments and exceeded Marketbeat.com’s consensus estimate of $0.170 billion or 510 basis points. Excluding fuel, because fuel surcharges are back, turnover continues to grow by 27% and is reinforced by a recent acquisition.

On a segment basis, truckload revenues increased the fastest at 77%, followed by a 36% increase in intermodal revenues. Intermodal revenue is driven by a 28% increase in revenue per load coupled with a 7% increase in volume. Integrated capacity solutions and dedicated contract services grew 29% and 28%, with DDS driven by a 20% increase in average truck count and a 6% increase in productivity. The weakest segment was Final Mile and it still grew at an 8% rate. FMS revenues were offset by supply issues which we see easing due to the strength of Truckload, ICS, Intermodal and DDS.

As for profits, it was the margins that really impressed us. The company increased its operating margin by 61% from a year ago to generate a 67% increase in GAAP earnings. GAAP earnings of $2.29 were up from $1.37 last year and beat the Marketbeat.com consensus of $0.34. The best news is that the company also used $75 million in cash flow to repurchase 382,000 shares and left its debt level unchanged on an annual basis.

Analysts like what JB Hunt hauls

There have been at least 5 sell side comments since the release of the JBHT Q1 report and the news is bullish. While 2 of the 5 lowered their price targets, their average price is above the average price of the 3 analysts who raised their targets and is in line with the broader consensus. According to the Markbeat.com consensus, the stock is trading around $212 for a gain of 24%. On a technical basis, the stock is set for a rebound, the question is how far? The premarket stock pushed it up about 2.0% and is trading near the $175 level. If the market continues this move, we are seeing a retest of the $190 region which will be the next big hurdle to price action.

Should you invest $1,000 in JB Hunt Transport Services right now?

Before you consider JB Hunt transportation services, you’ll want to hear this.

MarketBeat tracks daily the highest rated and most successful research analysts on Wall Street and the stocks they recommend to their clients. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the market ripples…and JB Hunt Transport Services was not on the list.

While JB Hunt Transport Services currently has a “Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

Article by Thomas Hughes, MarketBeat


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