Truckload and Intermodal Backdrop Remains Challenged for J.B. Hunt

Senior Equity Analyst

Matthew Young

Revenue segments as reported by the company.

Operating revenues, excluding fuel surcharge revenues

Fuel surcharge revenues

Revenue Segments

Gross Profit, Operating Income, and Net Income as a percentage of Revenue

Operating Margin

Profit Margin

Margins

An operating expense is an expense a business incurs through its normal business operations. Often abbreviated as OPEX.

Rents and purchased transportation

Salaries, wages and employee benefits

Fuel and fuel taxes

Depreciation and amortization

Operating supplies and expenses

General and administrative expenses, net of asset dispositions

Insurance and claims

Operating taxes and licenses

Communication and utilities

Operating Expenses

Year over year growth in Revenue and Operating Expenses.

Revenue Y/Y

OpEx Y/Y

Growth

Shares outstanding refer to a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.

Outstanding Shares

Market Cap

Also known as Price/Sales Ratio. Calculated using Average market cap for the quarter / Annualized quarterly revenue.

Revenue Multiple

At its core, J.B. Hunt is an intermodal marketing company; it contracts with the Class I railroads for the line-haul movement of its domestic containers. It was one of the first for-hire truckload carriers to venture into intermodal shipping, forming a partnership with BNSF Railway in the West in 1990, followed by an agreement with Norfolk Southern in the East. Hunt has established a definitive leadership position in intermodal shipping, with a 20%-plus share of a $30 billion industry. The next-largest competitor is Hub Group, followed by the intermodal divisions of Schneider National, STG Logistics, and Knight Swift. Intermodal made up around 47% of Hunt's total revenue in 2022.

Hunt isn't immune to downturns, but over the past decade-plus it's reduced its exposure to asset-based truckload shipping, which represents about 30% of sales (including for-hire and dedicated-contract business) versus 60% in 2005. Hunt is also shifting its for-hire truckload operations to more of an asset-light model via its drop-trailer offering and owner-operators, while investing in asset-light truck brokerage and final-mile delivery. 

Truckload capacity was extremely tight from mid-2020 through much of 2022, thus contract pricing soared across all modes, while intermodal demand jumped on the retail sector restocking boom. That said, the onset of rail service shortfalls in second-half 2021 throttled Hunt's container volumes despite positive demand. Service levels are now recovering (a positive for truck-to-rail conversions), but retail end market demand is softening on sluggish restocking activity. Overall, we expect 2023 to be a year of normalization for the trucking and intermodal markets, before recovering in 2024. 

Hunt's long-term growth prospects remain favorable, especially for intermodal. Our outlook isn't without risk, but we expect normalized real U.S. retail sales growth and truck-to-rail conversions to support 3.0%-3.5% intermodal-market volume expansion on average over our forecast horizon, with 2.0%-2.5% core pricing gains. We suspect Hunt will modestly outperform those trends given its favorable competitive positioning on BNSF's rail network.

Business Strategy & Outlook

Because the for-hire full-truckload industry can be a tough business in which to differentiate, our narrow moat rating for J.B. Hunt primarily stems from the company's intermodal shipping operations, which benefit from a combination of the network effect and scale-based cost advantage. In terms of scale, it would be quite difficult for a small competitor to replicate Hunt's vast in-house drayage capabilities (more than 6,000 tractors) and fleet of more than 100,000 53-foot-high cube containers capable of double stacking--by far the largest in the industry. The firm's intermodal container fleet provides preferred access to rail capacity and would be costly to replicate. Preferred access is no small edge, given that the truck-versus-rail decision for shippers is heavily influenced by service levels (in addition to the cost gap). We think this is a key reason Hunt has outperformed its peers in terms of container volume growth (on average) over the past decade.

The concept of the network effect suggests that the value of a service becomes more powerful and tougher to replicate with more buyers and suppliers. In its core intermodal business, Hunt's large network of shippers and long-standing partnerships with major rail carriers reinforce a compelling value proposition and generate healthy barriers to entry because duplication by small providers with fewer resources would prove difficult. For shippers (customers), the firm's immense customer base affords significant buying power (greater rail capacity access and discounts), and its industry-leading container fleet acts as a highly valuable source of capacity.

From the perspective of the Class I rail carriers, Hunt is an attractive source of cargo because of its ability to aggregate fragmented demand across an immense pool of shippers looking to capitalize on multimodal capabilities.

Narrow

Economic Moat

J.B. Hunt Transport Services

J.B. Hunt Transport Services, Inc. engages in the provision of logistics solutions. It operates through the following segments: Intermodal (JBI), Dedicated Contract Services (DCS), Integrated Capacity Solutions (ICS), Final Mile Services (FMS) and Truckload (JBT). The JBI segment offers intermodal freight operations for rail carriers. The DCS segment includes private fleet conversion and final-mile delivery services. The ICS segment provides single-source logistics management for clients who intend to outsource their transportation activities. It offers flatbed, refrigerated, expedited, less-than-truckload, dry-van, and intermodal freight services. The FMS segment provides final-mile delivery services to customers through a nationwide network of cross-dock and other delivery system network locations. The JBT segment is responsible for full-load, dry-van freight that is transported via roads and highways. The company was founded by Johnnie Bryan Hunt, Sr. and Johnelle D. Hunt on August 10, 1961, and is headquartered in Lowell, AR.

Earnings data Q3 2023

Revenue

Cost of revenue

Gross profit

Operating expenses

SG&A

Other

Operating income

EBITDA

Net income

Earnings per share

Total assets

Current assets

Cash & equivalents

Receivables

Inventory

Non-current assets

Net PPE

Intangibles

Total liabilities

Current liabilities

Short term debt

Income tax payable

Non-current liabilities

Long-term debt

Total equity

Stockholders equity

Minority interest

Total liabilities & equity

Total debt

Net debt

Book value per share

Cash from operations

Funds from operations

Change in working capital

Cash from investing

Capital expenditure

Purchase/sale of investments

Purchase/sale of business

Other sources

Cash from financing

Change in stock

Change in debt

Cash dividends paid

Cash from other sources

Net change in cash

Free cash flow

Werner Enterprises

WERN vs. JBHT: Which Stock Is the Better Value Option?

WERN vs. JBHT: Which Stock Should Value Investors Buy Now?

Alphabet

J.B. Hunt (JBHT) partners with Waymo to test run autonomous freight transportation between Houston and Fort Worth in Texas.

J.B. Hunt (JBHT) Teams Up With Waymo to Test Autonomous Trucks

The Waymo Via system will be put through its paces on the Houston-to-Fort Worth run.

Alphabet's Waymo Teams With J.B. Hunt on Self-Driving Truck Testing Program

Waymo will be moving freight for a major customer of transportation logistics company J.B. Hunt Transport Services under what the two companies are calling a “test run” that will take place in one of the country's busiest trade corridors.

Waymo and JB Hunt partner to bring autonomous trucks to Texas in new pilot

J.B. Hunt Transport Services Inc. (NASDAQ: JBHT) will test high-autonomy software from Waymo Via on a leading customer route from Houston to Fort Worth, Texas, where robot truck evaluations are making up a greater portion of Lone Star State traffic. Motorists near the trucks on Interstate 45 might notice an array of sensors, cameras and spinning light-detecting radars affixed to the semi tractors.

J.B. Hunt will test Waymo Via autonomous trucks in Texas

U.S. truck fleet operator J.B. Hunt Transport Services Inc and autonomous vehicle technology company Waymo will test human-supervised, self-driving trucks to deliver cargo between Houston and Fort Worth, Texas, expanding an existing relationship.

Waymo, J.B. Hunt test robo-trucks in Texas

Waymo, J.B. Hunt Plan Commercial Freight Runs In Texas With Robot Big Rigs Waymo, Alphabet Inc.'s self-driving unit, is partnering with trucking giant J.B.

Waymo, J.B. Hunt Partner On Texas Commercial Freight Runs With Robot Big Rigs

LOWELL, Ark.--(BUSINESS WIRE)--J.B. Hunt Transport Services Inc. (NASDAQ: JBHT), one of the largest supply chain solutions providers in North America, and Waymo, the leading autonomous driving technology developer, announced a collaboration today to autonomously move freight in Texas for one of J.B. Hunt's leading customers. The test run will use Waymo Via, the company's autonomous Class 8 trucking unit powered by the Waymo Driver, to haul freight between facilities in Houston and Fort Worth, T

J.B. Hunt and Waymo Collaborate to Move Freight Autonomously in Texas

Covenant Logistics Group Inc

Landstar System

Old Dominion Freight Line

With the freight scenario continuing to improve and trucking rates rising, stocks like Landstar (LSTR), Covenant Logistics (CVLG), Old Dominion (ODFL) and J.B. Hunt (JBHT) should continue to benefit.

4 Trucking Stocks to Buy as Freight Scene Continues to Improve

Amkor Technology

Avnet

Best Buy

Wabash National

Bond yields dipped, and the Dow Jones rose 80 points, the S&P 500 jumped 0.4%, and the Nasdaq moved 0.5% higher. Make the most of this market with Q.ai's top buys for the day.

Amkor Technology Inc Ranked Among Today's Top Buys

LOWELL, Ark.--(BUSINESS WIRE)--J.B. Hunt Transport Services Inc. (NASDAQ: JBHT), one of the largest supply chain solutions providers in North America, and the University of Arkansas today announced two new funds that will advance the Sam M. Walton College of Business' focus on sustainability and inclusion in supply chain by accelerating current projects and creating an endowed scholarship program. "Since launching our collaboration in December, we have identified several opportunities to improv

J.B. Hunt, University of Arkansas Announce $1M Endowed Scholarship Fund for Supply Chain Inclusion

JB Hunt (JBHT) is well positioned to outperform the market, as it exhibits above-average growth in financials.

JB Hunt (JBHT) is an Incredible Growth Stock: 3 Reasons Why

J.B. Hunt is set to report significant growth in 2021 and 2022 as a result of significant pent-up demand. Free cash flow will be lower in 2021 as the company has to ramp up CapEx to keep up with demand.

J.B. Hunt - Thoughts On The Current Situation

LOWELL, Ark.--(BUSINESS WIRE)--J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) Executive Vice President of Highway Services Eric McGee and Chief Financial Officer and Executive Vice President John Kuhlow will address the 2021 KeyBanc Capital Markets' Virtual Industrials and Basic Materials Conference at 10:00 a.m. eastern time on Thursday, June 3, 2021. Interested investors not attending the conference may listen to the presentation via the webcast link. A presentation replay will also be mad

J.B. Hunt Transport Services, Inc. Announces Participation in the 2021 KeyBanc Capital Markets' Virtual Industrials & Basic Materials Conference

Management from J.B. Hunt Transport Services (NASDAQ: JBHT) said the volume strength experienced in the first quarter has continued thus far through the second during a virtual appearance at BofA Securities' transportation conference Wednesday.

No quick fix for intermodal service, J.B. Hunt says

This keynote interview is part of FreightWaves' LIVE @HOME virtual event Unprecedented product, equipment and labor dislocations will persist through most, if not all, of 2021, putting all supply chain stakeholders to the test and elevating technology's role in driving customer solutions, Shelley Simpson, the chief commercial officer of J.B. Hunt Transport Services Inc. (NASDAQ:JBHT), said Wednesday.

J.B. Hunt braced for ‘chaotic' balance of 2021, Simpson says

ArcBest

ARCB vs. JBHT: Which Stock Is the Better Value Option?

ARCB vs. JBHT: Which Stock Should Value Investors Buy Now?

LOWELL, Ark.--(BUSINESS WIRE)--J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) Executive Vice President and President of Intermodal Darren Field, Chief Financial Officer and Executive Vice President John Kuhlow, and Executive Vice President of Highway Services Eric McGee will address the 2021 Virtual BofA Securities Transportation, Airlines and Industrials Conference at 8:40 a.m. eastern time on Wednesday, May 19, 2021. Investors interested in attending the virtual conference may register to

J.B. Hunt Transport Services, Inc. Announces Participation in the 2021 Virtual BofA Securities Transportation, Airlines and Industrials Conference

LOWELL, Ark.--(BUSINESS WIRE)--J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) Executive Vice President and President of Highway Services Brad Hicks and Chief Financial Officer and Executive Vice President of Finance John Kuhlow will address the 2021 Virtual Wells Fargo Industrials Conference at 11:20 a.m. eastern time on Wednesday, May 5, 2021. Interested investors not attending the conference may listen to the presentation via a webcast found on the newsroom section of J.B. Hunt's website a

J.B. Hunt Transport Services, Inc. Announces Participation in the 2021 Virtual Wells Fargo Industrials Conference

AGCO

Avery Dennison

Bar Harbor Bankshares

Cambridge Bancorp

Cortland Bancorp

FirstCash Holdings

Healthcare Services Group

Johnson & Johnson

Mid Penn Bancorp

Nasdaq

People's United Financial

Peoples Bancorp

Premier Financial

Parker-Hannifin

Southern Company

1st Source

Travelers

United Bancorp

Whirlpool

WSFS Financial

This article series provides a weekly summary of dividend changes.

Dividend Increases: April 17-23, 2021

Deutsche Bank

Heartland Express

Knight-Swift Transportation Holdings

Marten Transport

P.A.M. Transportation Services

US Xpress Enterprises

Trends so far during the first-quarter earnings season are supportive of truckload carriers posting sizable growth in 2021. February's severe winter storms had many analysts lowering estimates for the quarter heading into the print.

Trucking's tailwinds evident in first quarter

J.B. Hunt Transport Services Inc. said Thursday it was raising its quarterly dividend by 7.1% to 30 cents a share. The new dividend will be payable May 21 to shareholders of record on May 7.

J.B. Hunt raises dividend by 7.1%, now yields about half the S&P 500

LOWELL, Ark.--(BUSINESS WIRE)--J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) announced today that its Board of Directors has declared a regular quarterly dividend on its common stock of $ 0.30 (thirty cents) per common share, a 7.1% increase over the prior quarter and an 11.1% increase over the prior year quarterly dividend. The dividend is payable to stockholders of record on May 7, 2021 and will be paid on May 21, 2021. About J.B. Hunt J.B. Hunt Transport Services, Inc., a Fortune 500 and

J.B. Hunt Transport Services, Inc. Announces an Increase of Quarterly Dividend

Intermodal services need to be the top priority if the transportation industry is to reduce its carbon footprint while maintaining efficient and productive operations, the chief sustainability officer at J.B. Hunt Transportation Services Inc. (NASDAQ:JBHT) said Thursday.

NZCS keynote: Transport must double down on intermodal use

CMS Energy

Nucor

When looking for bargains, investors could be interested in the following three companies, as their stocks have low price-to-median-price-sales-values when compared to the average of the S&P 500 (which stands around 1.7 as of the writing of this article).

3 Low Median Price-Sales Stocks to Consider

News for J.B. Hunt Transport Services Stock (JBHT)