J.B. Hunt (JBHT) Stock Falls On Q2 Earnings, Sales Miss

J.B. Hunt Transport Services Inc. (NASDAQ:JBHT) performed disappointingly in the second quarter of 2017, reporting lower-than-expected earnings as well as revenues.

This transportation company’s earnings of 88 cents per share missed the Zacks Consensus Estimate of 92 cents. The bottom line also dipped 4.35% on a year-over-year basis due to higher operating expenses.

Total operating revenue increased 6.93% year over year to $1,726 million but marginally fell short of the Zacks Consensus Estimate of $1,733.1 million. Excluding fuel surcharges, operating revenues increased 5% year over year. The top and the bottom line miss disappointed investors. Consequently, shares of the company declined in early trading.

During the quarter, this Zacks Rank #4 (Sell) company repurchased approximately 564,000 shares for $50 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Operating income in the second quarter decreased 6.8% to $164 million. Lower customer rates hurt results. But interest expenses increased on a year-over-year basis.

The effective income tax rate in the second quarter of 2017 is 37.4% compared with 38% a year-ago. The company expects a tax rate of 35% for full-year 2017. In addition, the company revised some aspects of its full-year 2017 guidance. For example, CAPEX for 2017 is now projected at $471 million (old guidance: $477 million).

Segmental Performance

The Intermodal division reported quarterly revenues of $1 billion, up 7% year over year. Overall volumes in the segment climbed 5%. Revenue per load, excluding fuel surcharge revenues, dipped 1%. Operating income increased 4% year over year to $110 million.

Dedicated Contract Services revenues increased 8% year over year to $412 million. The company added new trucks to the fleet and customer retention rates remained above 98%. Operating income decreased 4% year over year to $49 million, primarily due to increased costs like driver wages.

Capacity Solutions revenues surged 9% year over year to $222 million on the back of 20% increase in volumes. Revenue per load plunged 9% on a year-over-year basis. Operating income declined over 100% due to lower gross profit margin and higher costs.

Truck revenues decreased 4% to $95 million. At the end of the quarter, the company operated 2,072 tractors, down 5.7% year over year. Also, operating income decreased 37% to $5.6 million due to higher costs like higher driver pay.

Liquidity

At the end of the second quarter, cash and cash equivalents were $7.3 million compared with approximately $6.4 million at the end of 2016. Long-term debt was $943.2 million compared with $986.3 million at the end of 2016.

J.B. Hunt Transport Services, Inc. Price and EPS Surprise

J.B. Hunt Transport Services, Inc. Price and EPS Surprise | J.B. Hunt Transport Services, Inc. Quote

Upcoming Releases

Investors interested in the transportation sector are keenly awaiting for second-quarter earnings reports from key players like Kansas City Southern (NYSE:KSU) , Canadian National Railway Company (NYSE:CNI) and Norfolk Southern Corp. (NYSE:NSC) in the coming days. While Kansas City Southern is scheduled to report on Jul 21, Canadian National and Norfolk Southern are scheduled to report on Jul 25 and Jul 26, respectively.

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