Sector Snap: Trucking Companies

Associated Press

NEW YORK (AP) — Shares of trucking companies tumbled Tuesday, a day after J.B. Hunt said its second-quarter net income jumped more than 20 percent, but its revenue fell short of Wall Street predictions. That raised concerns about a potential slow-down in the industry.

J.B. Hunt Transport Services Inc., based in Lowell, Ark., said Monday that it earned $80.5 million, or 67 cents per share. That matched the average prediction of analysts surveyed by FactSet. Total operating revenue rose 9.2 percent to $1.26 billion, falling short of average estimates of $1.3 billion.

Hunt said its results got a boost from steady demand and higher volumes at some of its major businesses, along with lower fuel costs at dedicated contract services and truck segments. Those gains were partially offset by a variety of higher costs, the company said.

Profit at J.B. Hunt's integrated capacity solutions business tumbled 25 percent, largely as a result of a jump in the costs of hauling goods that more than offset a double-digit increase in revenue.

KeyBanc analyst Todd Fowler said the results of J.B. Hunt, the first trucking company to report this quarter, make him somewhat cautious about the overall sector. He said the results confirm his expectations of stable freight activity during the second quarter, but relatively "lackluster" results in June, resulting in slightly lower-than-expected shipping volumes.

The results also show that pricing for certain kinds of trucking services isn't rising as much as previously expected, he said.

"That said, margins benefited from the sequential decline in diesel costs during the quarter, a trend we expect from other carriers, but likely not sustainable if fuel prices stabilize," Fowler wrote in a note to investors.

J.B. Hunt shares fell $3.36, or 5.8 percent, to $54.97 in afternoon trading, after dropping as low as $53.32 earlier in the day. Elsewhere in the sector, Werner Enterprises Inc. fell 86 cents, or 3.6 percent, to $22.94. Knight Transportation lost 48 cents, or 3.1 percent, to $15.04. Old Dominion Freight Line fell 63 cents to $41.19.