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Here's Why Investors Should Retain J.B. Hunt (JBHT) Stock Now
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J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) bottom line is benefiting from its consistent shareholder-friendly initiatives in the form of dividend payments and share repurchases. Higher interest expenses, lower segmental revenues and high debt act as headwinds.
Factors Favoring JBHT
JBHT’s efforts to reward its shareholders through dividend payments and share repurchases boost investor confidence and positively impact the company's bottom line. Concurrent with the fourth quarter of 2023 earnings release, JBHT’s board of directors has approved a dividend hike of 2%, thereby raising its quarterly cash dividend from 42 cents per share to 43 cents. The raised dividend was paid out on Feb 23, 2024, to all its shareholders of record as of Feb 9, 2024. The move reflects JBHT’s intention to utilize free cash to enhance its shareholders’ returns.
The company is also active on the buyback front, having resumed the same in the fourth quarter of 2020 after a temporary pause amid coronavirus concerns. In the first quarter of 2024, JBHT purchased almost 126,000 shares for $25 million. As of Mar 31, 2024, JBHT had approximately $366 million remaining under its share repurchase authorization.
Declining operating expenses due to lower fuel costs, purchased transportation costs, and salaries, wages and benefits expenses, have the potential to boost J.B. Hunt's bottom line. During the first quarter of 2024, operating expenses declined 6.8% year over year.
Key Risks
J.B. Hunt's top line continues to grapple with weakness across the majority of its business segments. JBHT reported first-quarter 2024 revenues of $2.94 billion, which missed the Zacks Consensus Estimate of $3.11 billion and fell 8.8% year over year. Total operating revenues, excluding fuel surcharge revenues, fell 7% year over year. The downfall was owing to a 9% decrease in segment gross revenue per load in both Intermodal (JBI) and Truckload (JBT), 22% fewer loads in Integrated Capacity Solution (ICS), and a modest decline in average trucks and productivity in Dedicated Contract Services (DCS).
Higher net interest expense is likely to mar J.B. Hunt’s bottom line. Net interest expense for the first quarter of 2024 increased 6% year over year due to higher effective interest rates and consolidated debt balance, partially offset by higher interest income.
J.B. Hunt’s weak cash position is worrisome. JBHT's cash and cash equivalents stood at $64.18 million at the end of the first quarter of 2024, much lower than the long-term debt of $1.36 billion. This implies that the company does not have sufficient cash to meet its debt obligations.
SKYW flaunts a VGM Score of A and has a market capitalization of $3.28 billion. The Zacks Consensus Estimate for SKYW’s 2024 earnings per share has moved up 6.9% in the past 90 days. Shares of SKYW have surged 58.5% year to date.
SKYW’s expected growth rate for 2024 is more than 100%. SKYW has a trailing four-quarter earnings surprise of 128.09%, on average.
TRN raised 2024 earnings per share guidance to the range of $1.35 to $1.55 (which excludes items outside of the company’s core business operations) from $1.30 to $1.50 guided previously. Shares of TRN have gained 10.7% year to date.
Over the past 30 days, the Zacks Consensus Estimate for TRN’s 2024 earnings has been revised 2.7% upward. For 2024, TRN’s earnings are expected to grow 8.70% year over year.
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Here's Why Investors Should Retain J.B. Hunt (JBHT) Stock Now
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) bottom line is benefiting from its consistent shareholder-friendly initiatives in the form of dividend payments and share repurchases. Higher interest expenses, lower segmental revenues and high debt act as headwinds.
Factors Favoring JBHT
JBHT’s efforts to reward its shareholders through dividend payments and share repurchases boost investor confidence and positively impact the company's bottom line. Concurrent with the fourth quarter of 2023 earnings release, JBHT’s board of directors has approved a dividend hike of 2%, thereby raising its quarterly cash dividend from 42 cents per share to 43 cents. The raised dividend was paid out on Feb 23, 2024, to all its shareholders of record as of Feb 9, 2024. The move reflects JBHT’s intention to utilize free cash to enhance its shareholders’ returns.
The company is also active on the buyback front, having resumed the same in the fourth quarter of 2020 after a temporary pause amid coronavirus concerns. In the first quarter of 2024, JBHT purchased almost 126,000 shares for $25 million. As of Mar 31, 2024, JBHT had approximately $366 million remaining under its share repurchase authorization.
Declining operating expenses due to lower fuel costs, purchased transportation costs, and salaries, wages and benefits expenses, have the potential to boost J.B. Hunt's bottom line. During the first quarter of 2024, operating expenses declined 6.8% year over year.
Key Risks
J.B. Hunt's top line continues to grapple with weakness across the majority of its business segments. JBHT reported first-quarter 2024 revenues of $2.94 billion, which missed the Zacks Consensus Estimate of $3.11 billion and fell 8.8% year over year. Total operating revenues, excluding fuel surcharge revenues, fell 7% year over year. The downfall was owing to a 9% decrease in segment gross revenue per load in both Intermodal (JBI) and Truckload (JBT), 22% fewer loads in Integrated Capacity Solution (ICS), and a modest decline in average trucks and productivity in Dedicated Contract Services (DCS).
Higher net interest expense is likely to mar J.B. Hunt’s bottom line. Net interest expense for the first quarter of 2024 increased 6% year over year due to higher effective interest rates and consolidated debt balance, partially offset by higher interest income.
J.B. Hunt’s weak cash position is worrisome. JBHT's cash and cash equivalents stood at $64.18 million at the end of the first quarter of 2024, much lower than the long-term debt of $1.36 billion. This implies that the company does not have sufficient cash to meet its debt obligations.
Zacks Rank and Stocks to Consider
JBHT currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include SkyWest, Inc. (SKYW - Free Report) and Trinity Industries, Inc. (TRN - Free Report) . Each stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SKYW flaunts a VGM Score of A and has a market capitalization of $3.28 billion. The Zacks Consensus Estimate for SKYW’s 2024 earnings per share has moved up 6.9% in the past 90 days. Shares of SKYW have surged 58.5% year to date.
SKYW’s expected growth rate for 2024 is more than 100%. SKYW has a trailing four-quarter earnings surprise of 128.09%, on average.
TRN raised 2024 earnings per share guidance to the range of $1.35 to $1.55 (which excludes items outside of the company’s core business operations) from $1.30 to $1.50 guided previously. Shares of TRN have gained 10.7% year to date.
Over the past 30 days, the Zacks Consensus Estimate for TRN’s 2024 earnings has been revised 2.7% upward. For 2024, TRN’s earnings are expected to grow 8.70% year over year.