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What’s in store for J.B. Hunt in 2015?



Fiscal year 2015

As shown in the following chart, J.B. Hunt (JBHT) expects its revenues to grow steadily at ~9–12%. It also expects stronger operating income. The Intermodal segment, or JBI, and the Dedicated Contract Services, or DCS, segment are expected to continue their strong performance. They should contribute to ~82% of the total revenues for 2015. The Integrated Capacity Solutions, or ICS, segment is expected to see 20% growth in its revenues. It’s expected to add five to eight new branches.

JBHT expects to add $260 million worth of new fleet. In the next year, it plans to spend $320 million on replacements across various segments. This would increase JBHT’s debt. It would put pressure on its margins. JBHT’s margins have already eroded in its major segments.

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About the industry

The trucking industry is one of the essential services that an economic recovery depends on. It’s often used as an indicator of the economy’s overall health. The industry faces many challenges in the coming year—like increasing driver shortage, higher recruiting expenses and mileage pay, growing truck and maintenance costs, lost productivity, and capacity concerns due to new regulations. Despite these challenges, the industry is expected to significantly outperform the SPDR S&P 500 ETF (SPY) in the coming year and beyond.

With the economy showing signs of positive growth, the trucking industry is set to follow in the coming years. This is a positive indicator for JBHT because it’s among the largest players. It should reap maximum benefits from the economic recovery.

Major players in this industry include JBHT, Landstar System (LSTR), Old Dominion Freight Line (ODFL), and Werner Enterprises, Inc. (WERN). Some of these companies are part of the First Trust Industrials/Producer Durables AlphaDEX Fund (FXR).


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