J.B.Hunt (JBHT) Underperforms Market in a Year: Here's Why
Shares of J.B.Hunt Transport Services, Inc. JBHT have lost 2.4% against the industry's 8.4% rise in a year’s time. The unfavorable performance was caused by escalating operating expenses and disappointing performance in the truck segment.
Let’s take a look at the factors that are responsible for the dismal price performance.
Acquisition-related costs and high operating expenses — including increased wages for drivers as well as rail purchased transportation costs are limiting bottom-line growth. Moreover, driver shortages are hurting the company’s operations for quite some time. Notably, operating expenses increased 6.3% in 2019.
Sluggish freight scenario is affecting volumes in the Truck segment. Truck revenues plunged 6.7% in 2019 due to lower loads and soft truck pricing. Consistent below-par performance in this unit will likely hurt the stock.
Moreover, J.B. Hunt is a highly-leveraged company with its debt-to-equity ratio (expressed as a percentage) currently at 57.2 compared with the industry’s 20.2. This implies that the company is funding most of its ventures with debt.
Also, the company has a below- par track record with respect to earnings per share (EPS), having underperformed the Zacks Consensus Estimate in three of the last four quarters. The company reported better-than-expected EPS in the other quarter. The company has trailing four-quarter negative earnings surprise of 6.3%, on average.
Negative Estimate Revisions and Weak Momentum Score
The negativity revolving around the stock is evident from the Zacks Consensus Estimate for the current year earnings being revised downward by 6% in the past 60 days to $5.6.
The company’s Momentum Score of D further highlights its short-term unattractiveness.
Additionally, J.B.Hunt carries a Zacks Rank #4 (Sell).
Stocks to Consider
Few better-ranked stocks in the transportation sector are Delta Air Lines DAL, Ryanair Holdings RYAAY and Azul S.A AZUL. Delta Airlines carries a Zacks Rank#2 (Buy), while Ryanair and Azul sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Delta Air Lines , Ryanair and Azul have rallied more than 6%, 5% and 17%, respectively, in a year.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
AZUL SA (AZUL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
