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Industry Headwinds To Blame For JB Hunt's Q3 Miss

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Baird blamed the third quarter earnings miss of J B Hunt Transport Services Inc (NASDAQ: JBHT) on continued industry headwinds, resulting in rate pressure from customers and losses on the sale of used equipment.

The brokerage maintained its Neutral rating and $85 target price after the company’s Q3 EPS of $0.97 came in below the recent $1.02 consensus and Baird’s $1.04 estimate. Revenue, however, matched expectations, but shortfall driven by EBIT declines in JBI, ICS, and JBT segments.

The company isn't expecting a trough in Intermodal/Truckload core contractual pricing growth until the second quarter of 2017. Though Baird still looks for an uptick in core contractual pricing growth during the fourth quarter, the visibility to such a catalyst appears low.

“We continue to expect decelerating/declining core Intermodal/Truckload pricing growth and decelerating Intermodal load growth to remain headwinds to JBHT in the near term,” analyst Benjamin Hartford wrote in a note.

Further, the analyst noted that faster-than-expected compression in brokerage margins is a headwind for other brokers during the balance of 2016.

As such, Hartford cut his 2016/2017 EPS estimates to $3.79 (from $3.92)/$4.21 (from $4.34), versus the recent $3.90/$4.36 consensus.

“All in, our thesis is materially unchanged: we would look to become more interested buyers in JBHT on pullbacks toward the low $70s and/or signs of inflecting industry pricing fundamentals,” Harford added.

At time of writing, shares of J B Hunt were up 0.68 percent to $78.98.

Latest Ratings for JBHT

Jan 2017BarclaysDowngradesOverweightEqual-Weight
Nov 2016KeyBancMaintainsOverweight
Nov 2016Loop CapitalInitiates Coverage OnBuy

View More Analyst Ratings for JBHT
View the Latest Analyst Ratings

Posted-In: Baird Benjamin HartfordAnalyst Color Reiteration Analyst Ratings


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