J.B. Hunt (JBHT) Misses Q3 Earnings, Beats Sales Estimates

J.B. Hunt Transport Services Inc. (NASDAQ:JBHT) reported mixed third-quarter 2016 financial results. The company’s bottom line missed the Zacks Consensus Estimate, whereas the top line surpassed expectations.

This transportation company’s earnings of 97 cents per share lagged the Zacks Consensus Estimate of $1.02 per share. The bottom line dipped 2.02% on a year-over-year basis due to higher operating expenses.

Total operating revenues increased 6.3% year over year to $1.69 billion. The top line beat the Zacks Consensus Estimate of $1.59 billion. Excluding fuel surcharges, operating revenues grew 8.4% year over year.

During the quarter, the company repurchased approximately 922,000 shares for $74.8 million. Operating income in the third quarter declined 5.7% to $183 million. Lower customer rates in the Intermodal (JBI), Truck (JBT) and Integrated Capacity Solutions (ICS) segments contributed to the decline in operating income in the quarter. Effective income tax rate for the quarter was 38% compared with 38.1% a year-ago. The company expects tax rate for 2016 to be 38%.

The Intermodal (JBI) division reported quarterly revenues of $970 million, up 2% year over year. Overall volumes in the segment climbed 7%. Revenue per load, excluding fuel surcharge revenues, dipped 2%. Operating income decreased 7% year over year to $116.9 million.

Dedicated Contract Services (DCS) revenues grew 6% year over year to $394 million. The company added new trucks to the fleet and customer retention rates remained above 98%. Operating income jumped 16% year over year to $52.5 million, mainly due to higher revenues and improved asset utilization.

Integrated Capacity Solutions (ICS) revenues surged 35% year over year to $233 million on the back of 88% increase in load volumes. On a year-over-year basis, revenue per load plunged 28.5% primarily due to lower fuel prices, reduced customer rates and weak customer demand resulting in freight mix changes. Operating income declined 26% to $8.5 million.

Truck (JBT) revenues were flat year over year at $97 million. At the end of the reported quarter, the company operated 2,183 tractors, up approximately 4% year over year. Operating income decreased 55.5% to $5.1 million due to lower customer rates per mile and higher costs.

Liquidity

At the end of the reported quarter, cash and cash equivalents were $5.5 million compared with approximately $5.6 million at year-end 2015. Long-term debt was $943.6 million compared with $998 million at the end of 2015.

Segmental Performance

Zacks Rank & Key Picks

J.B. Hunt currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the transportation space include Copa Holdings (NYSE:CPA) , SkyWest Inc. (NASDAQ:SKYW) and ANA Holdings Inc. (OTC:ALNPY) . While SkyWest and ANA Holdings carry a Zacks Rank #2 (Buy), Copa Holdings sports a Zacks Rank # 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

For 2016, the Zacks Consensus Estimate for Copa Holdings has climbed 10 cents to $4.55 per share over the last month. The same has increased 12 cents to $2.65 per share over the last three months at SkyWest. The earnings growth rate for ANA Holdings for the current year stands at a healthy 24.3%, much higher than the industry figure.

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