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J.B. Hunt Q3 earnings & revenues beat on higher volumes

J.B. Hunt Transport Services Inc. (JBHT), one of the major truckload carriers in the U.S., reported third-quarter 2014 earnings of 87 cents per share, beating the Zacks Consensus Estimate of 85 cents. The figure also improved 21.3% from 75 cents earned in the year-ago quarter.

Total revenue increased 11.9% year over year to $1,601.2 million and was also ahead of the Zacks Consensus Estimate of $1,593 million. Operating revenues surged 13%, while fuel surcharge revenue improved 5.3%. The earnings results boosted the stock price, which closed 3.04% higher on Tuesday trade on Nasdaq.

Meanwhile, operating income for the quarter improved 14.2% year over year to $172.1 million.

Segment Results

The Intermodal division reported quarterly revenues of $963.6 million, up 8.3% year over year. The average tractor count increased to 4,615 from 4,033 in the year-ago quarter. Meanwhile, operating income moved up 5.9% year over year to $125 million.

Dedicated Contract Services revenues grew 13.2% year over year to $361 million in the third quarter on higher number of revenue-generating trucks and increased customer demand at mature contracts. The average truck count stood at 6,650 against 6,099 in the year-ago quarter. Operating income inched up 17.1% year over year to $34.3 million. 

Integrated Capacity Solutions revenues rose 34.7% year over year to $185.1 million, attributable to a 24% increase in load volume and 8.6% growth in revenue per load. Operating income surged 200% year over year to $8.4 million owing to improvement in revenues and gross revenue margins. On a year-over-year basis, the carrier base rose 11% while employee count increased 18%.

Truck revenues dropped a mere 1.1% year over year to $95.8 million owing to a 5.5% decline in fleet size. The average tractor count reduced to 1,816 from 1,989 in the year-ago quarter. Also, the average haul length contracted 3.5%.

The company reported an operating profit of $4.3 million in the reported quarter as against $0.6 million in the third quarter of 2013. 

Liquidity

At the end of the reported quarter, cash and cash equivalents increased to $5.9 million from $5.8 million at end-2013. Long-term debt stood at $587.1 million as against $458.4 million at the end of 2013.

Capital expenditure in the last nine months of 2014 totaled $479 million against $334 million in the same period last year.

Our Analysis

We remain encouraged by the enhanced equipment velocity, accelerated fleet conversion and branch expansion. The company’s Intermodal segment is expected to show solid growth on strong fundamentals and highway-to-rail conversion, while the Dedicated Contract Service segment holds strong growth opportunities stemming from the growing popularity of final mile services. However, a competitive scenario, higher staff costs and a deteriorating truck business limit its upside potential.

J.B. Hunt currently carries a Zacks Rank #3 (Hold). However, better-ranked stocks worth considering within the same sector are Covenant Transportation Group, Inc. (CVTI), The Knight Transportation Inc. (KNX) and Landstar System Inc. (LSTR). Both Covenant Transportation and Knight Transportation sport a Zacks Rank #1 (Strong Buy), while Landstar holds a Zacks Rank #2 (Buy).

HUNT (JB) TRANS (JBHT): Free Stock Analysis Report
KNIGHT TRANSN (KNX): Free Stock Analysis Report
COVENANT TRANS (CVTI): Free Stock Analysis Report
LANDSTAR SYSTEM (LSTR): Free Stock Analysis Report
 
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Zacks Investment Research is characterized by a team of experts who are passionate about your investing success and is focused on sharing the same reliable investment research they would want for themselves.