On Feb 8, we maintained our Neutral recommendation on
J.B. Hunt Transport Services Inc.
), reflecting its attractive asset base, leading market position
and high-class operating systems. The transportation service
provider holds a Zacks Rank #2 (Buy).
Why Kept at Neutral?
On Jan 24, J.B. Hunt posted better-than-expected fourth quarter
2012 financial results. The company's earnings matched the Zacks
Consensus Estimate and revenues surpassed our projection based on
higher shipment in most of the segments alongside continued
growth in fuel surcharge revenues.
For the coming months, we expect the company to benefit from the
resurgence in trade given its attractive asset-light models that
produce the most attractive returns on invested capital compared
to other industry players such as
Covenant Transportation Group Inc.
). Two of the company's segments - Intermodal and Dedicated
Contract Services (DCS) that contributed more than 80% to the
total revenue in 2012 - are well poised for growth with strong
We also appreciate the company's continuous investments to
upgrade equipment such as tractors, trailers, containers and
trucks that will likely boost the performance level of the
transportation services. Other favorable factors include high
demand from customers, improved productivity, an efficient
workforce and penetration into new markets.
Despite the positives, we prefer to remain on the sidelines,
owing to concerns such as inflationary cost conditions in rail
and dray transportation, increases in insurance and wages, lower
utilization and stiff competition.
For the first and second quarters of 2013, the Zacks Consensus
Estimates for earnings are 64 cents and 77 cents per share,
respectively. This reflects a respective year-over-year growth of
11.9% and 15.2%.
Other stocks within the sector that will likely perform
impressively in the coming months are
Swift Transportation Company
Marten Transport Ltd.
). Both the stocks carry a Zacks Rank #1 (Strong Buy).
COVENANT TRANS (CVTI): Free Stock Analysis
HUNT (JB) TRANS (JBHT): Free Stock Analysis
MARTEN TRANS (MRTN): Free Stock Analysis
SWIFT TRANSPORT (SWFT): Free Stock Analysis
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