J.B. Hunt Q3 earnings, revenue to fall, analysts say

Lowell-based carrier J.B. Hunt Transport Services Inc. is expected to post declines in earnings and revenue in the third quarter amid soft freight volumes and challenges in its brokerage segment.

After the markets close Tuesday (Oct. 15), J.B. Hunt is projected to report third-quarter earnings of $1.42 per share, down from $1.80 per share in the same period last year, based on a consensus of 19 analysts. Revenue is expected to decrease by 4.7% to $3.04 billion from $3.19 billion.

In an earnings preview, analyst Daniel Imbro, senior associates Brady Lierz and Joe Enderlin, and associate Reed Seay, all of Little Rock-based Stephens Inc., expect J.B. Hunt to miss earnings expectations “as volume growth remains negative (year-over-year) and (brokerage) challenges continue. (Dedicated) margins should sequentially moderate…and this will remain a drag through year-end. Sentiment feels overly bearish on (J.B. Hunt), which could create a positive trading setup if estimates come down ahead of earnings.”

The analysts updated their estimates to reflect more seasonally normal freight volumes and network imbalance costs, and pricing pressure from a competitive bid season. They said more robust ocean rates have led to increased transloading activity, contributing to solid domestic container growth in the third quarter.

The analysts cited data showing intermodal volumes from the West Coast have increased as freight is diverted from Canada and the East Coast. However, the volume weakness in other regions will offset this growth, resulting in more normal seasonal volumes. Still, intermodal volumes are projected to rise in the third quarter from the second quarter.

Margin pressure should ease as contracts are repriced in this bid season. More robust volumes in the fourth quarter and into 2025 are expected to support margins. In the second half of 2025, pricing is expected to improve as truck rates increase, which also will help margins. The analysts said the railroads’ “next few years of growth will focus heavily on intermodal,” and this should lead to stronger volume growth for J.B. Hunt as the truck market tightens.

This year, the dedicated market has been competitive, but J.B. Hunt has continued to gain business in its dedicated segment. The new business, however, comes with increased startup costs, putting pressure on dedicated margins. Segment operating margins are projected to be 11% in the third quarter, slightly below the company’s long-term target range of 12% to 14%. The analysts expect margins to return to this range in 2025.

In the third quarter, J.B. Hunt’s brokerage segment continued to be challenged and a drag on earnings, but it’s expected to improve modestly from the second quarter, analysts said. They expect the segment to grow with small and mid-sized customers, and this should be helped by the acquisition of the brokerage assets of BNSF Logistics. The segment is expected post operating losses through 2025. Analysts said J.B. Hunt’s smaller segments, such as the final mile, have remained resilient.

The company’s capacity investments, including the acquisition of Walmart’s intermodal containers, are projected to lead to lower capital spending in 2025 and 2026, according to the analysts. “As margins improve and capital spending moderates, free cash flow should improve, and we expect share repurchases to be a primary use of free cash flow.”

Stephens analysts maintained an overweight (buy) rating and a $195 target price for J.B. Hunt shares. Shares (NASDAQ: JBHT) closed Wednesday (Oct. 9) at $166.09, up 81 cents. In the past 52 weeks, the stock has ranged between $153.12 and $219.51.