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Tuesday, Benchmark analysts reiterated their Buy rating and $195.00 price target on shares of J.B. Hunt Transport Services (NASDAQ:JBHT), despite reducing their earnings estimates following the company's fourth-quarter earnings report.
J.B. Hunt reported an earnings per share (EPS) of $1.53, which fell short of both the FactSet consensus estimate of $1.61 and Benchmark's estimate of $1.59. The results, however, included an impairment charge from the BNSF acquisition. Excluding this charge, the adjusted fourth-quarter EPS was $1.66, surpassing expectations due to slightly better operating income.
J.B. Hunt, which typically does not provide guidance, indicated that first-quarter operating income is expected to see a normal sequential decline of 20%-25%, which is more than 15% below consensus and Benchmark's estimates. This forecast prompted a drop in the stock's price last Friday. Consequently, Benchmark has lowered their first-quarter and full-year EPS estimates for 2025 and 2026.
In the fourth quarter, J.B. Hunt's intermodal volume increased by 4.5%, exceeding Benchmark's projections. However, additional costs incurred to service customers partially offset the benefits of this increased volume.
Despite these costs, the intermodal operating margins were slightly better than Benchmark's expectations. The report also noted that, due to lower prices during the 2024 bid season, intermodal revenue per load, excluding fuel, decreased by 3% year-over-year but was in line with expectations.
Benchmark analysts believe that despite the disappointing guidance for the first quarter, J.B. Hunt's diverse business model and secular growth drivers in the Intermodal and Dedicated segments can support continued EPS growth over the long term. They caution, however, that patience may be tested as earnings estimates are adjusted downward and mid-cycle earnings projections are delayed.
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