Following my coverage of J.B. Hunt Transport Services (NASDAQ: JBHT ) in April 2024, which I downgraded to a hold rating as I was worried about the near-term performance, this post is to provide an update on myI take a fundamentals-based approach to value investing.I disagree with the common misconception held by many investors that low multiple stocks must be cheap. I look for companies that offer the best long-term durability at the most affordable prices. Consequently, I have a propensity to be drawn to ...

It’s been about 27 ½ months since I suggested investors avoid J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT ), and in that time, the shares are down about 27.3% against a gain of about 39% for the S&PI'm a quant investment newsletter writer who marries fundamental analysis with the latest research in momentum. Over the past few years, I’ve developed a piece of software that helps me track the level of optimism and pessimism embedded in stock price. I seek to challenge the assumptions embedded in price by ...

Core Insights - J.B. Hunt Transport Services (JBHT) reported first-quarter 2025 earnings per share of $1.17, exceeding the Zacks Consensus Estimate of $1.15, although quarterly earnings declined 4.1% year over year due to weak freight demand and excess capacity [1][2] Financial Performance - Total operating revenues for the quarter were $2.92 billion, slightly above the Zacks Consensus Estimate but down 0.8% year over year, primarily due to a 5% decrease in average truck count in the Dedicated Contract Services unit and a 15% drop in stops in the Final Mile Services unit [2] - Total operating income decreased 8% year over year to $178.7 million [2] Segmental Highlights - The Intermodal division generated revenues of $1.47 billion, a 5% increase year over year, with intermodal volume rising 8% [3] - Dedicated Contract Services segment revenues fell 4% year over year to $822 million, impacted by a 5% decline in average trucks [4] - Integrated Capacity Solutions revenues decreased 6% year over year to $268 million, with segmental volumes down 13% [5] - Truckload revenues fell 7% year over year to $167 million, with load volumes increasing 2% [6] - Final Mile Services revenues dropped 12% year over year to $201 million, with operating income plunging 69% [8] Liquidity and Share Buyback - At the end of the first quarter of 2025, JBHT had cash and cash equivalents of $43 million and long-term debt of $880.2 million [9] - The company repurchased 1,400,000 shares for $234 million during the quarter, with approximately $650 million remaining under its share repurchase authorization [9]

Q1 2025 Results J.B. Hunt Transport Services, Inc. Truckload (JBT) Disclosure This presentation and discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "estimates," or similar expressions are intended to identify these forward-looking statements. These statements are based on J.B. Hunt's current plans and expectations and involve risks and uncertainties that could cause future activit ...

Financial Data and Key Metrics Changes - For Q1 2025, consolidated GAAP revenue declined by 1%, operating income decreased by 8%, and diluted EPS decreased by 4% compared to the prior year quarter, primarily due to lower yields and inflationary cost pressures [15][16][20] - The company has reduced people costs by over $200 million over the past two years through headcount attrition and performance management, although some savings were offset by merit increases and higher benefit costs [16][17] Business Line Data and Key Metrics Changes - Intermodal volumes reached record levels in Q1 2025, with an 8% year-over-year increase, and strong performance in the Eastern network, which grew by 13% [13][45] - The Dedicated Contract Services segment continues to have industry-leading margins, with a focus on maintaining balance in the network to drive the best utilization of trailing assets [31][39] - The Final Mile segment experienced muted demand for big and bulky products, although fulfillment network demand was positive due to off-price retail trends [30] Market Data and Key Metrics Changes - Overall customer demand trended in line with normal seasonality, despite weather events impacting operations in January and February [22] - The truckload market has loosened as the quarter progressed, indicating that truckload capacity continues to exceed demand [23] Company Strategy and Development Direction - The company remains focused on operational excellence, providing valuable services to customers, and scaling strategic investments [10][12] - Management is exploring various options to aggressively eliminate costs while remaining agile to adapt to changing market dynamics [10][11] Management's Comments on Operating Environment and Future Outlook - The management team expressed confidence in the company's positioning for future growth despite a challenging freight environment, emphasizing the importance of service levels and safety culture [12][13] - The company is committed to repairing margins and improving financial performance, with a focus on cost discipline and productivity improvements [9][19] Other Important Information - The company issued $750 million of new senior notes to extend the term on some maturing debt and expects net capital expenditures to fall between $500 million to $700 million for 2025 [20] - During Q1, the company repurchased $234 million of stock, with $650 million remaining under current authorization [21] Q&A Session Summary Question: Can you provide insights on intermodal bid season and rate increases? - Management indicated mild satisfaction with bid season success, achieving some rate increases while also losing some business due to disciplined pricing [56][57] Question: How do you view the impact of tariffs on the market? - Management acknowledged potential impacts of tariffs on supply and demand but noted the difficulty in predicting magnitude and timing [25][86] Question: What is the outlook for intermodal pricing and profitability? - Management stated that while they are working to repair margins, the competitive environment and network inefficiencies continue to pose challenges [135][136] Question: How is the company managing its capacity in light of current market conditions? - Management emphasized that reducing capacity is not the strategy; instead, they are looking for ways to utilize excess equipment effectively [116][119] Question: What are the expectations for intermodal revenue per carload in the second half of the year? - Management noted that while there is a consensus for a 2% gain, the ongoing negotiations and market conditions could lead to different outcomes [148][150]

Core Insights - JB Hunt reported $2.92 billion in revenue for Q1 2025, a year-over-year decline of 0.8%, with EPS of $1.17 compared to $1.22 a year ago, indicating a slight decrease in profitability [1] - The revenue exceeded the Zacks Consensus Estimate by 0.10%, while the EPS surprised by 1.74% over the consensus estimate of $1.15 [1] Revenue Performance - Dedicated revenue was $822.29 million, down 4.4% year-over-year, compared to the average estimate of $856.59 million [4] - Integrated Capacity Solutions revenue was $268.04 million, a 6% decline year-over-year, against an estimate of $283.57 million [4] - Intermodal revenue increased by 5.3% year-over-year to $1.47 billion, surpassing the average estimate of $1.42 billion [4] - Truckload revenue was $166.63 million, down 6.6% year-over-year, compared to the average estimate of $173.99 million [4] - Final Mile Services revenue decreased by 12.5% year-over-year to $200.70 million, below the estimate of $223.06 million [4] - Fuel surcharge revenues were $361.66 million, down 7.6% year-over-year, slightly above the estimate of $359.16 million [4] Key Metrics - Average trucks in Dedicated segment were 12,624, slightly below the estimate of 12,736 [4] - Revenue per load in Integrated Capacity Solutions was $1,946, exceeding the estimate of $1,890.89 [4] - Revenue per load in Intermodal was $2,816, slightly above the estimate of $2,802.74 [4] - Trailing equipment in Intermodal was 124,971, exceeding the estimate of 123,062 [4] - Operating revenues, excluding fuel surcharge revenues, were $2.56 billion, a 0.3% increase year-over-year, but below the estimate of $2.58 billion [4] - Intersegment eliminations were -$5.53 million, worse than the estimate of -$4.63 million, representing a 30.2% increase year-over-year [4] Stock Performance - JB Hunt shares returned -7.8% over the past month, underperforming the Zacks S&P 500 composite's -3.9% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [3]

Group 1: Earnings Performance - JB Hunt reported quarterly earnings of $1.17 per share, exceeding the Zacks Consensus Estimate of $1.15 per share, but down from $1.22 per share a year ago, representing an earnings surprise of 1.74% [1] - The company posted revenues of $2.92 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.10%, but down from $2.94 billion year-over-year [2] - Over the last four quarters, JB Hunt has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - JB Hunt shares have declined approximately 19.2% since the beginning of the year, compared to a decline of 8.1% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.45 on revenues of $3.01 billion, and for the current fiscal year, it is $6.16 on revenues of $12.44 billion [7] - The estimate revisions trend for JB Hunt is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Transportation - Truck industry, to which JB Hunt belongs, is currently in the bottom 4% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact JB Hunt's stock performance [5]

Financial Data and Key Metrics Changes - For Q1 2025, consolidated GAAP revenue declined by 1%, operating income decreased by 8%, and diluted EPS decreased by 4% compared to the prior year quarter [13][14] - The declines were primarily driven by lower yields and inflationary cost pressures, particularly noticeable increases in insurance premiums for the third consecutive year [14] Business Line Data and Key Metrics Changes - Intermodal volumes set a first-quarter record, with volumes up 8% year-over-year, and specific monthly increases of 9% in January, 6% in February, and 7% in March [35] - The Dedicated Contract Services segment sold approximately 260 new trucks in Q1, with an annual net sales target of 800 to 1,000 new trucks [29] - Final Mile demand for big and bulky products remains muted, but fulfillment network demand was positive due to off-price retail trends [23] Market Data and Key Metrics Changes - Overall customer demand trended in line with normal seasonality, with intermodal service demand remaining strong [17] - The truckload market loosened as the quarter progressed, indicating that truckload capacity continues to exceed demand [18] Company Strategy and Development Direction - The company remains focused on operational excellence, providing valuable services to customers, and scaling strategic investments [9][10] - Management is exploring various options to eliminate costs more aggressively while maintaining service quality [10] - The company aims to repair margins and improve financial performance as a top priority [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for future growth despite a challenging freight environment [11] - The uncertain macro environment and trade policy are top concerns for customers, impacting their planning and strategies [20] - Management emphasized the importance of being agile and responsive to market dynamics [10] Other Important Information - The company issued $750 million of new senior notes to extend the term on some of its debt maturing later in the year [16] - The company repurchased $234 million of stock during the first quarter, with $650 million remaining on its current authorization [16] Q&A Session All Questions and Answers Question: Can you provide an update on intermodal bid season? - Management indicated mild satisfaction with bid season success, achieving some rate increases while losing some business due to disciplined pricing [42][72] Question: How are you managing costs amid uncertain demand? - Management is focused on scenario planning and adjusting cost management strategies based on evolving market conditions [58][117] Question: What is the impact of tariffs on your business? - Management noted that customers are considering various strategies in response to tariffs, but the magnitude and timing of impacts remain uncertain [20][66] Question: How do you view the current pricing environment? - Management acknowledged that while they are pushing for price increases, they are also facing competitive pressures that affect pricing outcomes [72][108]

Financial Performance - First quarter 2025 net earnings were $117.7 million, or diluted earnings per share of $1.17, down 4% from $127.5 million, or $1.22 per diluted share in Q1 2024[2][6]. - Total operating revenue for Q1 2025 was $2.92 billion, a decrease of 1% from $2.94 billion in Q1 2024, primarily due to a 5% decrease in average truck count in Dedicated Contract Services (DCS) and a 15% decline in Final Mile Services[3][6]. - Operating income decreased 8% to $178.7 million in Q1 2025 compared to $194.4 million in Q1 2024, attributed to lower DCS revenue and increased expenses[4][6]. Revenue Breakdown - Intermodal (JBI) revenue grew by 5% in Q1 2025, driven by an 8% increase in load volume, marking the highest first quarter volume in the company's history[7]. - DCS revenue decreased 4% in Q1 2025, with a 5% decline in average trucks, but productivity increased by 2%[9][13]. - Integrated Capacity Solutions (ICS) reported a revenue decline of 6% in Q1 2025, with an operating loss of $(2.7) million, an improvement from $(17.5) million in Q1 2024[11][15]. - Final Mile Services (FMS) revenue decreased 12% in Q1 2025, primarily due to weak demand across end markets[16][22]. - Truckload (JBT) revenue decreased 7% in Q1 2025, with a 6% decline in revenue per load, although load volume increased by 2%[18][23]. Debt and Share Repurchase - As of March 31, 2025, total outstanding debt was $1.58 billion, up from $1.48 billion at the end of 2024, with net capital expenditures of approximately $225 million in Q1 2025[20][21]. - The company repurchased approximately 1.4 million shares for about $234 million in Q1 2025, with $650 million remaining under its share repurchase authorization[21]. Load and Marketplace Performance - For the three months ended March 31, 2025, J.B. Hunt reported 521,821 intermodal loads, an increase from 485,166 in the same period of 2024, representing a growth of 7.5%[34]. - Revenue per load in the intermodal segment decreased to $2,816 from $2,876, reflecting a decline of 2.1% year-over-year[34]. - The dedicated segment saw a total of 942,894 loads, down from 1,004,337, indicating a decrease of 6.1%[34]. - Integrated Capacity Solutions reported 137,744 loads, a decrease of 13% from 158,247 in the previous year, while revenue per load increased to $1,946 from $1,803, a growth of 7.9%[34]. - The gross profit margin for Integrated Capacity Solutions improved to 15.3%, up from 14.3% year-over-year[34]. - The marketplace for J.B. Hunt 360 generated $91.9 million in revenue, down from $105.5 million, a decline of 13%[34]. Cash Flow and Assets - Net cash provided by operating activities for the three months ended March 31, 2025, was $404.2 million, compared to $466.5 million in 2024, a decrease of 13.3%[38]. - Current assets totaled $1.67 billion as of March 31, 2025, down from $1.77 billion at the end of 2024, a decline of 6.1%[36]. - Total current liabilities increased to $1.87 billion from $1.68 billion, reflecting an increase of 11.2%[36]. - The book value per share decreased to $38.98 from $39.92, a decline of 2.4% year-over-year[38].

Company Overview - XPO shares increased by 15.4% to close at $105.56, following a significant volume of trading, contrasting with a 14.7% loss over the previous four weeks [1] - The stock's rise was influenced by President Trump's announcement of a 90-day pause on tariffs affecting the market [1] Earnings Expectations - XPO is projected to report quarterly earnings of $0.66 per share, reflecting an 18.5% decrease year-over-year, with revenues expected at $1.98 billion, down 1.9% from the same quarter last year [2] - The consensus EPS estimate for XPO has been revised 2.8% lower in the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not lead to price appreciation [3] Industry Context - XPO operates within the Zacks Transportation - Truck industry, where JB Hunt also resides, having closed 9.4% higher at $141.65, but with a -16% return over the past month [3] - JB Hunt's consensus EPS estimate has decreased by 3.7% to $1.16, representing a 4.9% decline from the previous year, and it currently holds a Zacks Rank of 4 (Sell) [4]