Yahoo Finance J.B. Hunt (JBHT) Segment Growth Aids Amid High Interest Expense
J.B. Hunt Transport Services, Inc. JBHT is benefiting from segmental growth and shareholder-friendly initiatives adopted by the company.
The company recently reported first-quarter 2023 earnings of $1.89 per share, which missed the Zacks Consensus Estimate of $2.04 and declined 17.5% year over year.
Total operating revenues of $3,229.58 million also lagged the Zacks Consensus Estimate of $3,434.4 million and fell 7.4% year over year. The downfall was due to declines in the volume of 25% in Integrated Capacity Solutions (ICS), 5% in Intermodal (JBI) and 17% in Final Mile Services (FMS), and a 17% decline in revenue per load in Truckload (JBT).
Revenue declines in ICS, JBI, FMS and JBT were partially offset by Dedicated Contract Services (DCS) revenue growth of 13%. Total operating revenues, excluding fuel surcharges, decreased 10.2% year over year.
J.B. Hunt Transport Services, Inc. Price, Consensus and EPS Surprise
J.B. Hunt Transport Services, Inc. price-consensus-eps-surprise-chart | J.B. Hunt Transport Services, Inc. Quote
How is J.B. Hunt Placed?
The strong performance of the DCS segment is driving J.B. Hunt’s top line. Revenues from the DCS segment rose 13% from the year-ago period in first-quarter 2023 to $879 million due to a 7% increase in average revenue producing trucks and a 5% increase in productivity (revenue per truck per week) versus the prior period. The same climbed 31% year over year in 2022 and 17.4% year over year in 2021 due to fleet productivity improvement and an increase in average revenue-producing trucks, among other factors.
We are also 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.
During first-quarter 2023, JBHT paid $43.58 million in dividends. The move reflects JBHT’s intention to utilize free cash to enhance its shareholders’ returns. The company is also active on the buyback front, having resumed the same in the fourth quarter of 2020 after a temporary pause amid coronavirus concerns.
J.B. Hunt repurchased 183,000 shares for $30.8 million in the first quarter of 2023. The trucking company had approximately $520 million remaining under its share repurchase authorization on Mar 31, 2023.
On the flip side, higher net interest expense is likely to mar J.B. Hunt’s bottom line. JBHT continues to incur higher interest expenses owing to higher interest rates and debt issuance costs. During 2022, net interest expense increased 9.7% year over year. Net interest expense for the first quarter of 2023 increased 17.5% year over year due to higher effective interest rates.
J.B. Hunt’s weak cash position is worrisome. JBHT's cash and cash equivalents were $52.60 million at the end of first-quarter 2023, much lower than the long-term debt of $991.71 million.
Zacks Rank & Stocks to Consider
J.B. Hunt currently carries a Zacks Rank #3 (Hold).
Investors interested in better-ranked stocks from the Zacks Transportation sector can consider Copa Holdings, S.A. CPA and Alaska Air Group, Inc. ALK, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Copa Holdings has an expected earnings growth rate of 44.31% for the current year. CPA delivered a trailing four-quarter earnings surprise of 33.35%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 15.3% over the past 90 days. Shares of CPA have soared 22.4% over the past six months.
Alaska Air has an expected earnings growth rate of 44.83% for the current year. The Zacks Consensus Estimate for ALK’s current-year earnings has improved 12.9% over the past 90 days. ALK has a long-term expected growth rate of 24.23%.
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J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
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