JB Hunt shares slip on weak 2Q sales

Profit at J.B. Hunt's integrated capacity solutions business tumbled 25 percent, largely as a result of a jump in the costs of hauling goods that more than offset a double-digit increase in revenue.

The Associated Press

7/18/2012

NEW YORK — Shares of J.B. Hunt Transport Services Inc. tumbled Tuesday, a day after the trucking company said its second-quarter net income jumped more than 20 percent, although revenue fell short of Wall Street predictions.

Hunt, based in Lowell, Ark., earned $80.5 million, or 67 cents per share. That matched the average prediction of analysts surveyed by FactSet. Total operating revenue rose 9.2 percent to $1.26 billion, falling short of average estimates of $1.3 billion.

J.B. Hunt said its results got a boost from steady demand and higher volumes at some of its major businesses, along with lower fuel costs at its dedicated contract services and truck segments. Those gains were partially offset by a variety of higher costs, the company said.

Profit at J.B. Hunt's integrated capacity solutions business tumbled 25 percent, largely as a result of a jump in the costs of hauling goods that more than offset a double-digit increase in revenue.

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"While in line, we believe results will be viewed as mixed considering heightened expectations into the quarter, recent positive earnings surprises and strong year-to-date share price performance," KeyBanc analyst Todd Fowler wrote in a note to investors backing his "Hold" rating for J.B. Hunt.

Fowler said that while he still thinks the company is the best in its sector, an expected slowdown in freight activity and weaker pricing in the second half of the year will limit its potential share price growth.

Jefferies analyst Peter Nesvold backed his "Hold" rating for J.B. Hunt and raised his price target for the company by $1 to $57.

"We believe J.B. Hunt's broad product offering will provide solid growth in a slow growth freight economy, and the variable-cost model will remain attractive during a rising interest rate and inflationary truck load operating cost environment," Nesvold wrote in his note to investors.

He added that the company's shares are trading near their fair value and, given expectations of slowing growth this year and next year, investors should probably hold off on picking up shares right now.

Kevin Jones of The Trucker staff can be reached for comment at kevinj@thetrucker.com.

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