Analysts expect J.B. Hunt’s 2021 revenue to exceed $10 billion

Lowell-based carrier J.B. Hunt Transport Services Inc. should see annual revenue exceed $10 billion for the first time as it competed across a variety of transportation modes amid tight capacity and strong pricing in 2021, according to analysts.

After the markets close on Jan. 18, the carrier is expected to report fourth-quarter earnings of $2.01 per share, up from $1.44 per share in the same period in 2020, based on a consensus of 19 analysts. Revenue is projected to increase by 19.6% to $3.27 billion, from $2.74 billion.

For 2021, earnings are projected to rise to $6.83 per share, from $4.74 per share in 2020. Revenue is expected to increase by 24% to $11.95 billion, from $9.64 billion, based on a consensus of 21 analysts.

In 1993, company revenue exceeded $1 billion. Revenue was more than $5 billion in 2012. It jumped to more than $8.61 billion in 2018 and surpassed $9.16 billion in 2019.

In a fourth-quarter earnings preview, analysts Justin Long and Jack Atkins and associates George Sellers and Cameron Hoglund, all of Little Rock-based Stephens Inc., said “we believe the capacity-constrained, disruptive environment in 2021 helped emphasize the value of (J.B. Hunt’s) strong competitive position across a variety of modes (intermodal, dedicated, brokerage, truckload and final mile.) And going forward, we believe the company’s ability to gain share in large addressable markets should result in an attractive long-term growth story with an improving return profile.”

Capacity is expected to remain tight and costs are projected to rise in 2022. As a result, strong pricing is expected to continue through the year, according to the analysts. They also expect intermodal growth to return this year “at strong incremental margins, significant growth in dedicated from a continuation of sales activity above its long-term guidance, and additional commentary around how (J.B. Hunt 360) can improve/integrate the entire organization.”

The Stephens analysts maintained an overweight (buy) rating for J.B. Hunt stock and raised the 12-month target price to $225, from $212.

Shares of J.B. Hunt (NASDAQ: JBHT) were trading Monday (Jan. 10) at $194.67, down $5.44 or 2.72%. In the past 52 weeks, the stock has ranged between $133.36 and $208.87.

Following is a preview by business segment:

INTERMODAL
Analysts expect intermodal pricing to be favorable this year and that the market can support double-digit rate increases.

In the fourth quarter, intermodal volumes are expected to fall by 3.5%, from the same period in 2020, according to the analysts. Volumes are expected to improve as the carrier’s new containers are delivered. They projected high-single-digit intermodal volume growth in 2022, from 2021. The rise can be attributed to the increased capacity and is expected even if rail service doesn’t improve.

According to the Association of American Railroads, U.S. railroads originated 1.22 million containers and trailers in December, down 8.2%, or 109,729 units, from the same month in 2020. In 2021, intermodal traffic rose to 14.14 million units, up 4.9%, or 665,528 containers and trailers, from 2020.

“For intermodal, a record-setting first half gave way to a lower second half as supply chain challenges persisted,” said John Gray, senior vice president of the Association of American Railroads. “Still, 2021 was the second-best U.S. intermodal year ever, behind only 2018.”

DEDICATED
According to the Stephens analysts, the segment faces margin pressures as a result of start-up costs and the frontline employee bonuses announced in December. However, revenue and operating income growth are expected for 2022. Operating income is expected to rise by 22% in 2022, from 2021, the analysts said.

BROKERAGE
In the fourth quarter, volumes are expected to be down slightly, from the same period in 2020. According to the analysts, truckload volumes are projected to rise as it looks to outgrow the market in 2022 and 2023.

Gross margins are expected to rise by 0.2 percentage points to 12.2% in the fourth quarter, from the previous quarter.