Al Root
One strategy for companies to pursue when the business outlook won't cooperate is to control costs. Logistics provider J.B. Hunt Transport Services did just that.
Its shares jumped early Thursday after the company reported better-than-expected third-quarter earnings on Wednesday evening.
Hunt posted earnings per share (EPS) of $1.76 from sales of $3.1 billion. Wall Street was looking for EPS of $1.46 from sales of $3 billion, according to FactSet.
Shares were up 13.1% at $157 in premarket trading, while S&P 500 and Dow Jones Industrial Average futures were up 0.4%.
A year ago, J.B. Hunt reported EPS of $1.49 from sales of $3.1 billion. Sales growth has been sluggish amid a weak shipping economy.
"We were encouraged to see [the company] implementing its cost-control strategy as a pragmatic response to the prolonged freight recession, with more savings expected over the coming quarter," wrote Citi analyst Ariel Rosa in a Wednesday report, adding that the company is still cautious about a recovery in freight pricing.
He rates shares Buy and has a $175 price target. Rosa boosted his target by $12 following earnings. Bernstein analyst David Vernon rates J.B. Hunt shares Hold. His price target is $172, up from $158 before earnings.
"Very strong (if a bit confusing) quarter," wrote Vernon. The company's intermodal -- freight which moves by both truck and rail -- expanded profit margins on little volume growth, but the truckload business realized lower income on higher sales. That's the confusing part. Higher sales typically mean higher earnings. Higher insurance and equipment costs were blamed.
Fortunately for J.B. Hunt, the intermodal business is seven to eight times larger than the truckload business.
While Vernon raised his price target, he is "not chasing" the stock because a recovery in freight pricing isn't on his horizon yet.
Overall, 46% of analysts covering J.B. Hunt stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for shares is about $164.
Coming into Thursday trading, J.B. Hunt stock was down about 19% so far this year. Weak freight markets are mainly to blame. Investors are also concerned about what railroad mergers could mean for the company's intermodal business.
Norfolk Southern and Union Pacific recently agreed to merge. The deal will face stiff regulatory hurdles. Hunt management believes their business can thrive regardless of what happens with railroad M&A.
Write to Al Root at allen.root@dowjones.com
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October 16, 2025 07:51 ET (11:51 GMT)
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