J.B. Hunt Transport Services
), one of the largest U.S. truckload carriers, is slated to release
its second quarter 2012 results on Monday, July 16. The current
Zacks Consensus Estimate for second quarter earnings per share is
pegged at 67 cents, representing an annualized growth estimate of
J.B. Hunt's first quarter earnings of 57 cents per share
surpassed the Zacks Consensus Estimate of 52 cents and soared 42.5%
from 40 cents earned in the year-ago quarter on strong growth
across most segments.
Revenues were also ahead of Zacks Consensus Estimate of $1.15
billion and increased 16.5% year over year to $1.17 billion.
Agreement of Estimate Revisions
For the second quarter, out of 22 analysts, one made an upward
revision and none moved downward over the last 7 days. Over the
last 30 days, three analysts moved upward while none went in the
For fiscal 2012, one analyst out of 24 revised the stock upward
while none moved south in last 7 days. Over the last 30 days,
positive and negative revisions were made by two analysts each
For fiscal 2013, out of 24 analysts, one moved upward and none
moved downward in the last 7 days. Over the last 30 days, two of
the analysts made upward revisions and one moved
Despite the tighter truckload market, we believe J.B. Hunt is
poised to benefit from two of its largest segments, Intermodal and
Dedicated Contract Services (DCS), which contributed more than 80%
of the total revenue in first quarter 2012.
The Intermodal segment continues to penetrate new markets and
gain market share in the east, benefiting from both longer-haul and
short-haul shipments. Volume gains are expected in the eastern
network through truck to rail conversions, and core pricing
expansion. The company is focused on reducing the number of empty
miles in its dray fleet which could improve efficiency. Going
further, we believe the company's expansion of service offerings in
countries like Mexico and cross selling activities with the ICS
segment and pricing gains on contract maturities will provide a
significant basis for intermodal's future growth.
The other segment, DCS is evolving into a highly specialized
fleet with a greater focus on final mile (i.e., residential)
delivery, and is expected to achieve double-digit revenue growth in
the long term. We expect this segment to witness growth, given
contract gains and pricing improvements. Additionally, increased
truck count and cost control measures also remain accretive to
future growth. The company continues to bring in new equipment and
transfer assets from less profitable businesses, thereby boosting
Further, J.B. Hunt is continuously investing in equipment such
as tractors, trailers, containers, trucks etc. in order to gain
market share and produce higher returns on invested capital. In
2011, the company's capital expenditures almost doubled to $446
million due to intermodal upgrades and purchase of equipment. We
expect the company to continue focusing on capital expenditure, in
particular for intermodal upgrades, given the growing demand for
intermodal services of rail carriers.
Magnitude of Estimate Revisions
Over the last 7 and 30 days, the magnitude of the second quarter
estimate revisions grew by a cent to 67 cents.
For fiscal 2012, the Zacks Consensus Estimate remained static at
$2.65 over the last 7 and 30 days.
Similarly, for fiscal 2013 no change was observed over the last
7 and 30 days and the earnings estimate remained unchanged at
With respect to earnings surprise, over the trailing four
quarters, J.B. Hunt delivered a positive earnings surprise with
average being 5.53%.
The upside potential of the stock for the second quarter is
4.48%. For fiscal 2012 and 2013, the Zacks Consensus Estimates'
upside potential is measured to be 1.13% and 1.63%,
We believe J.B. Hunt continues to gain market share across all
segments, particularly in Intermodal, Dedicated Contract Services
and Integrated Capacity Solutions that performed well in the first
quarter. Further, effective cost control and continued freight rate
gains also remain encouraging.
However, the company faces intense competition from other
truckload carriers such as
YRC Worldwide Inc.
) due to its low barrier to entry. Additionally, rapidly rising
fuel costs and tightening of capacity in the Truck market amid
truck load conversion to rail intermodal may affect the company's
Consequently, we are maintaining our long-term Neutral
recommendation on J
B. Hunt with a Zacks Rank #3 (Hold).
CON-WAY INC (CNW): Free Stock Analysis Report
HUNT (JB) TRANS (JBHT): Free Stock Analysis
YRC WORLDWD INC (YRCW): Free Stock Analysis
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