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Why Shares of J.B. Hunt Fell on Friday

By Lou Whiteman – Oct 16, 2020 at 6:31PM

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Network congestion led to a quarterly earnings miss.

What happened

Shares of J.B. Hunt Transport Services (JBHT 2.26%) closed down nearly 10% on Friday after the trucking company reported weaker-than-expected third-quarter earnings. Network issues led to higher costs, causing the company to underperform.

So what

On Friday morning, J.B. Hunt said it earned $1.18 per share in the quarter, short of analyst expectations of $1.27 per share. Revenue of $2.47 billion was actually above the $2.36 billion consensus, but high costs plagued the company in the quarter.

The company is an intermodal specialist, meaning it takes containers off of trains and uses trucks to transport them to their final destination. In the quarter, J.B. Hunt was plagued by network congestion, with the company unable to keep up with improving train operational metrics, which caused issues on the expense side.

Intermodal crates stacked at a port.

Image source: Getty Images.

J.B. Hunt said issues included customer labor shortages that caused delays unloading trucks, which in turn led to delays deploying their trucks elsewhere.

"The most prevalent cost impacts in the quarter were driven by the disruption in our networks due to congestion and capacity tightness from labor challenges," company interim chief financial officer John Kuhlow said in a post-earnings call with investors.

Now what

The good news out of this report is that the network delays were in part a sign of the strong demand for J.B. Hunt's services. Revenue came in ahead of expectations, and the company was upbeat about demand heading into the key holiday season.

J.B. Hunt is a best-of-breed operator that suffered from a challenging three-month period. The third-quarter didn't go as investors had hoped, but there is nothing in the results to indicate it's time for shareholders to hit the panic button.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

J.B. Hunt Transport Services Stock Quote
J.B. Hunt Transport Services
JBHT
$183.89 (2.26%) $4.06

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