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Shares of J.B. Hunt Transport Services (NASDAQ:JBHT) have declined 31.6% in a year’s time due to multiple headwinds.
One-Year Price Performance
Factors Weighing on the Stock
High operating expenses have been limiting bottom-line growth for quite some time. Notably, factors like high wages for drivers are causing increase in operating expenses. In first-quarter 2019, the metric registered an 8% improvement.
Also, driver shortages have been hurting operations of the company for quite some time. High capital expenditures are too pushing up costs. Additionally, acquisition-related costs are limiting bottom-line growth.
The successive deterioration in the operating ratio (operating expenses as a percentage of revenues) during the fourth quarter of 2018 and the first quarter of 2019 is an added concern. Operating income (on a reported basis) also decreased in both the quarters due to costs associated with rail purchase transportation.
Furthermore, J.B. Huntis highly leveraged company. This is evident from the fact that the ratio of its long-term debt-to-equity (expressed as a percentage) is currently 58.3, which compares unfavorably to the figure of 16.8 for its industry. For current-quarter earnings, the Zacks Consensus Estimate has been revised 7% downward over the past 60 days, highlighting the negative sentiment surrounding the stock.
These apart, the company’s Momentum Score of C and a Zacks Rank #4 (Sell) reflect its short-term unattractiveness.
Stocks to Consider
Investors interested in the broader Transportation sector may consider Fly Leasing (NYSE:FLY) , GATX Corporation (NYSE:GATX) and SkyWest (NASDAQ:SKYW) . While Fly Leasing sports a Zacks Rank #1 (Strong Buy), GATX and SkyWest carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fly Leasing and GATX flaunt an encouraging earnings history, having outperformed the Zacks Consensus Estimate in each of the trailing four quarters. Meanwhile, shares of SkyWest have surged more than 33% so far this year.
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