J.B. Hunt (JBHT) Q2 Earnings Miss Estimates; View Revised

J.B. Hunt Transport Services Inc. (NASDAQ:JBHT) reported second-quarter 2016 financial results. Though the company’s bottom line missed the Zacks Consensus Estimate, its top line met our expectations.

This transportation company’s earnings came in at 92 cents per share, lagging the Zacks Consensus Estimate of 96 cents. The bottom line, however, improved 4.5% on a year-over-year basis.

Total operating revenues increased 5% year over year to $1.62 billion, in line with the Zacks Consensus Estimate. Operating income in the quarter inched up 1.2% year over year to $176 million.

Segmental Performance

The Intermodal (JBI) division reported quarterly revenues of $933 million, up 3% year over year. Load volumes in the segment climbed 9%. Revenue per load dipped 1% (excluding fuel surcharge revenue). Operating income decreased 11% year over year to $105.6 million. Rise in costs associated with rail purchase transportation, equipment ownership, insurance and claims, and driver recruitment and retention hurt segmental results, offsetting gains from volume growth, improved box utilization and lower maintenance and outsourced carrier costs.

Dedicated Contract Services (DCS) revenues grew 4% year over year to $383 million. The company added new trucks to the fleet and customer retention rates stayed above 98%. Operating income jumped 24% year over year to $50.5 million mainly on the back of higher revenues, improved asset utilization and reduction in safety costs.

Integrated Capacity Solutions (ICS) revenues grew 17% year over year to $204 million on the back of a 62% rise in volumes. On a year-over-year basis, revenue per load plunged 28% primarily due to lower fuel prices and weak customer demand resulting in freight mix changes. Operating income skyrocketed more than 100% year over year to $10.9 million.

Truck (JBT) revenues were up 1% year over year to $98 million. At the end of the reported quarter, the company operated 2,186 tractors, up 5.5% year over year. Operating income decreased 9% to $8.9 million due to lower rates per loaded mile and higher costs.

Liquidity

At the end of the reported quarter, cash and cash equivalents were $11.3 million compared with approximately $5.6 million at year-end 2015. Long-term debt stood at $958 million compared with $998 million at the end of 2015.

View Changed

The company expects the JBI, DCS, ICS and JBT segments to contribute 58%, 23%, 13% and 6%, respectively, to total revenues in 2016.Total revenues for 2016 are still projected to grow by 7% over the 2015 level instead of a band of 9–12% projected earlier. Capex guidance for 2016 has been reiterated at $537 million.

Zanks Rank & Key Picks

J.B. Hunt currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the transportation space are Star Bulk Carriers Corp. (NASDAQ:SBLK) , Euroseas Ltd (NASDAQ:ESEA) , and United Parcel Services Inc. (NYSE:UPS) . All three stocks hold a Zacks Rank #2 (Buy).