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Higher Freight Rates to Drive J.B. Hunt’s First-Quarter Earnings

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First-quarter expectations

J.B. Hunt Transport Services (JBHT) is anticipated to report its first-quarter earnings results on April 15. The largest US trucking company has surpassed Wall Street’s consensus estimates in the trailing four quarters with an average surprise of 8.5%.

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Analysts seem to be optimistic that the company will continue its trend of reporting strong double-digit quarterly earnings growth in the quarter. J.B. Hunt registered double-digit earnings growth in all the four quarters of 2018. For the first quarter, analysts expect adjusted EPS of $1.26 for JBHT, implying a YoY rise of over 17.7%.

Factors to consider

Analysts expect increased revenue and improved freight rates to drive JBHT’s first-quarter earnings higher. Revenues for the quarter are likely to grow 13.2% YoY to $2.2 billion mainly driven by higher freight rates and increased volumes.

In the past few quarters, the trucking company has witnessed improved freight rates due to strong shipping demand. In the fourth quarter of 2018, JBHT reported a 16% YoY increase in its Intermodal segment’s revenue per load, while its Truck division registered an 18% YoY increase in rates per mile and a rise of 10% in revenue per load.

However, higher operating expenses due to increased recruitment costs, driver wages, and startup costs for new dedicated contracts are likely to partially offset the bottom-line growth in the first quarter. Notably, the trucking business is facing the massive challenge of driver shortages. Therefore, JBHT has to pay higher wages to retain drivers due to their scarcity.

Most of JBHT’s competitors in the transportation sector (IYT) are expected to report their first-quarter results in the coming weeks. Analysts anticipate C.H. Robinson Worldwide (CHRW) and Hub Group (HUBG) to post YoY first-quarter EPS growth of 13.2% and 12.4%, respectively. Peer XPO Logistics (XPO) is projected to report a 30.6% YoY decline in first-quarter EPS.

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