J.B. Hunt Transportation Services Inc. (JBHT) is known as a container rather than a trucking company.
Today cargo is moved seamlessly by transferring a container between trucks, trains, and ships in order to achieve door-to-door delivery. It’s a complex process that is being refined and J.B. Hunt is on the cutting edge.
Instead of meeting the railroads head on and competing for long distance haulage, the company has entered into partnership agreements with most of the leading rail carriers and complements each end of their operations in order to meet customer needs. Hunt has gone even further, contracting with hundreds of major corporations such as Home Depot to provide them with customized freight movement using systems and delivery services tailored to meet their particular requirements.
Hunt reported earnings of $0.58 a share in the first quarter, down slightly from $0.61 in the previous year due to the bad winter and unusual start-up costs in the Contract Services operations. However, management noted that customer demand was returning to normal late in the period and there was top line growth with intermodal load increasing 5% and truckload volumes up 9% year-over-year.
Looking ahead, significant investments by the railroads designed to broaden their intermodal markets should provide Hunt with scope to generate well above average volume growth. Earnings of about $3.15 a share are expected this year, compared to $2.87 in 2013, with a jump to the $4 range in 2015. J.B. Hunt is a Buy with a target of $88.
Gordon Pape, The Internet Wealth Builder, www.buildingwealth.ca, 1-888-287-8229, May 19, 2014
