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J.B. Hunt Shares Rose 6% after Strong Q4 Results

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J.B. Hunt Transport (JBHT) shares gained ~6% in the extended trading session on January 17 after the company reported overwhelming fourth-quarter results. The largest trucking company’s top and bottom-line results fared better than analysts’ expectations and marked significant YoY (year-over-year) growth.

J.B. Hunt’s fourth-quarter adjusted EPS of $1.78 beat analysts’ consensus estimate of $1.48 and registered 70% YoY growth. The strong bottom-line growth was mainly driven by higher revenues and reduced share counts. The bottom-line growth was partially offset by increased operating expenses. The company witnessed over 50% earnings growth in the last three quarters of 2018.

The fourth-quarter revenues were $2.32 billion—marginally higher than analysts’ estimate of $2.30 billion. The quarterly revenues grew 16% YoY due to the higher revenue per load, increased customer rates, and favorable freight mix.

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J.B. Hunt reported revenue growth across all of its segments. The Intermodal segment’s sales grew 15% YoY due to a 16% increase in the revenue per load, a better freight mix, and higher customer rates. The Dedicated Contract Service segment reported a 25% rise in its revenues due to improved productivity and higher customer rates. The Integrated Capacity Solutions segment’s revenues grew 7% due to higher volumes. The growth was partially offset by lower revenue per load. The Truck segment’s unit sales rose 21% due to 10% higher revenue per load and an 18% increase in the rates per loaded mile.

Despite strong revenue growth, the company’s fourth-quarter operating income declined 15.8% YoY to $122.7 million mainly due to an increase in rail purchase transportation costs, a rise in driver wages, higher independent contractor rates per mile, and higher salary and wage expenses for non-driving personnel.

Fiscal 2018 performance

For fiscal 2018, J.B. Hunt reported revenues of $8.62 billion, which beat analysts’ expectations of $8.58 billion and grew 19.8% YoY. The adjusted EPS of $5.69 beat the consensus estimate by 30 cents and improved 59% YoY.

In the transportation sector, apart from J.B. Hunt, CSX (CSX) reported its 2018 results. CSX’s fiscal 2018 adjusted EPS of $3.85 grew 67% YoY due to 7% higher revenues, lower costs, and reduced taxes.

J.B. Hunt’s top competitors (IYT) including C.H. Robinson Worldwide (CHRW) and Werner Enterprises (WERN) are expected to witness a 37% and 82.7% YoY growth in their respective 2018 EPS.

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