J.B. Hunt Transport Services, Inc.’s JBHT bottom line is benefiting from its consistent shareholder-friendly initiatives, such as dividend payments and share repurchases. Higher interest expense, lower segmental revenues and high debt weigh act as headwinds.
JBHT’s efforts to reward its shareholders through dividend payments and share repurchases boost investor confidence and positively impact the company's bottom line. With the quarterly dividend of 43 cents per share (annualized $1.72 cents per share), JBHT's dividend yield is currently pegged at 0.95%. The move reflects JBHT’s intention to utilize free cash to enhance its shareholders’ returns.
The company is also active on the buyback front, having resumed the same in the fourth quarter of 2020 after a temporary pause amid coronavirus concerns. In the third quarter of 2024, JBHT purchased almost 1,200,000 shares for $200 million. As of Sept. 30, 2024, JBHT had approximately $967 million remaining under its share repurchase authorization. Consistent shareholder-friendly initiatives instill investor confidence and positively impact J.B. Hunt's bottom line.
Declining operating expenses due to lower fuel costs, purchased transportation costs, and salaries, wages and benefits expenses have the potential to boost J.B. Hunt's bottom line. During 2023, operating expenses fell 12.2% year over year. During the first nine months of 2024, operating expenses declined 4.8% year over year.
J.B. Hunt's top line continues to grapple with weakness across the majority of its business segments. JBHT reported third-quarter 2024 revenues of $3.07 billion, which surpassed the Zacks Consensus Estimate of $3.04 billion but fell 3% year over year. The downfall was owing to a 5% and 6% decrease in gross revenue per load in Intermodal and Truckload, respectively, a decline in load volume of 10% and 6% in Integrated Capacity Solutions and Dedicated Contract Services, respectively, and 6% fewer stops in Final Mile Services.
Higher net interest expense is likely to mar J.B. Hunt’s bottom line. JBHT continues to incur higher interest expenses owing to higher interest rates and debt issuance costs. Net interest expense for 2022 and 2023 increased 9.7% and 16.2% year over year, respectively. Net interest expense for the first nine months of 2024 increased 34.8% year over year due to higher effective interest rates and consolidated debt balance, partially offset by higher interest income.
J.B. Hunt’s weak cash position is worrisome. JBHT's cash and cash equivalents stood at $120 million at the end of the third quarter of 2024, much lower than the long-term debt of $1.03 billion. This implies that the company does not have sufficient cash to meet its debt obligations.
JBHT currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Transportation sector are C.H. Robinson Worldwide, Inc. (CHRW) and Wabtec Corporation WAB. Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CHRW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 10.29%.
The Zacks Consensus Estimate for CHRW’s 2024 earnings has been revised 6.4% upward over the past 90 days. CHRW has an expected earnings growth rate of 33.3% for 2024. Shares of CHRW have gained 21.6% so far this year.
WAB has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 9.46%.
The Zacks Consensus Estimate for WAB’s 2024 earnings has been revised 2.5% upward over the past 90 days. WAB has an expected earnings growth rate of 28.55% for 2024. Shares of WAB have gained 49.4% so far this year.
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