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J.B. Hunt (JBHT) to Report Q3 Earnings: What’s in the Cards?


J.B. Hunt Transport Services, Inc. JBHT is scheduled to release third-quarter 2018 results on Oct 16.

Last reported quarter, the company delivered a positive earnings surprise of 7%. Apart from the earnings beat, it reported better-than-expected revenues. Moreover, both the metrics improved year over year. Lower effective tax rate aided results.

However, things do not look too rosy for the third quarter. The Zacks Consensus Estimate for third-quarter earnings has moved 1.4% downward over the last 60 days.

Factors at Play

J.B. Hunt has been struggling with driver shortages for quite some time. To counter the issue, it increased driver wages that are likely to affect bottom-line growth as has been the case in the past few quarters. High capital expenditures might further weigh on the bottom line.

Adding to the woes are the company’s high debt levels. This is evident from the long-term debt-to-equity (expressed as a percentage) ratio of 37.2, comparing unfavorably with the industry’s tally of 12.8.

However, high freight rates arising from strong shipping demand are expected to boost results. Also, a low tax rate is likely to increase free cash flow, which in turn should aid the bottom line.

Apart from the company’s primary division — Intermodal, the Dedicated Contract Services (DCS) and Integrated Capacity Solutions (ICS) segments are expected to perform well in the quarter, driving the top line in turn.

The Zacks Consensus Estimate for third-quarter intermodal revenues stands at $1,202 million, above $1,165 million reported in the second quarter of 2018. The consensus mark for DCS revenues is pegged at $539 million, higher than $530 million previous quarter. The same for ICS revenues stands at $376 million, comparing favorably with $347 million in the last reported quarter.

J.B. Hunt Transport Services, Inc. Price and EPS Surprise

J.B. Hunt Transport Services, Inc. Price and EPS Surprise | J.B. Hunt Transport Services, Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that J.B. Hunt is likely to beat estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a favourable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. But that is not the case here as elaborated below.

Earnings ESP: J.B. Hunt has an Earnings ESP of -3.73%, representing the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. While the Most Accurate Estimate stands at $1.37 per share, the Zacks Consensus Estimate is pegged higher at $1.42. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: J.B. Hunt currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, a company needs positive ESP as well to be confident about an earnings beat. Hence, this combination leaves our surprise prediction inconclusive.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Canadian Pacific Railway Limited CP, Alaska Air Group, Inc. ALK and C.H. Robinson Worldwide, Inc. CHRW as these stocks too possess the right combination of elements to deliver an earnings beat in their next releases.

Canadian Pacific has an Earnings ESP of +4.24% and a Zacks Rank #2. The company will report third-quarter earnings on Oct 18. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alaska Air Group has an Earnings ESP of +1.05% and a Zacks Rank #3. The company is scheduled to release third-quarter earnings numbers on Oct 25.

C.H. Robinson has an Earnings ESP of +0.10% and a Zacks Rank of 2. The company will announce third-quarter financial results on Oct 30.

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