14 April 2020

Sentiment Positive for J.B. Hunt, Despite Bumpy Ride

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What’s happening: J.B. Hunt Transport Services is scheduled to report its first-quarter results after the closing bell on Tuesday, April 14.

What happened: The Lowell, Arkansas-based carrier company has been facing challenges since March and it’s not just the coronavirus impact. J.B. Hunt is expected to report lower earnings this quarter, following several one-time costs incurred in March.

Despite these factors, investor sentiment has remained positive for the stock. Shares have been moving higher, even amid the slump in the overall markets. The company is expected to report revenue growth for the first quarter and could announce a share buyback program.

  • The consensus revenue estimate stands at $2.2 billion, representing 5.3% growth versus the same period in the previous year.
  • The company is expected to report earnings of $1.01 per share, a 7.3% decline from the first quarter last year.

Why it matters: Shares of J.B. Hunt have risen, as the company approaches its quarterly release. Sentiment has been positive, with several analysts recommending this stock citing the company’s massive scale, competitive positioning and structural advantages. J.B. Hunt is an integral part of America’s supply chain and continues to move goods across the country during the coronavirus crisis.

Although J.B. Hunt’s first-quarter earnings have fallen victim to higher costs, these are one-time in nature. In late March, the carrier giant announced three nonrecurring costs of $23.9 million, comprised mainly of bonuses for drivers and other personnel who continue to work to keep freight moving amid the pandemic.

J.B. Hunt’s volumes were on par for January and February, but declined in March due to COVID-19. Analysts are projecting a 3% year-over-year decline in intermodal volumes for the first quarter and some decline can be expected in forthcoming quarters in case there is an economic recession.

J.B. Hunt’s robust balance sheet and strong liquidity position gives it the wherewithal to combat an economic recession.

How the shares have performed so far: Shares of J.B. Hunt have recently been in focus. The stock has climbed around 6% in the past five trading days and is 8% higher over the month. Despite this recent upward momentum, the shares offer an attractive entry point, having declined around 18% year-to-date while the financial markets were in a free fall.

What to watch: With widespread lockdowns and an impending economic recession, investors are looking for companies that can continue to deliver. J.B. Hunt is under severe pressure to report strong numbers this quarter. Investors are also keen to know management’s projections for the upcoming quarters.

The Markets Today

     

US stocks will be in focus today, with the commencement of the first-quarter earnings season.

Context: After posting a decline for most of the session, US stocks closed mixed on Monday. Although the Dow and S&P 500 declined, the Nasdaq posted gains and closed the session in positive territory. Investors are expecting a sluggish first-quarter earnings season, with most companies reporting declines due to the COVID-19 pandemic.

Details: US markets remained closed on Friday, after finishing a strong week that saw the S&P 500 recording its biggest weekly gain since 1974.

New York Governor Andrew Cuomo said on Monday that the state and five others will be announcing their plans to reopen their economies, which have been closed due to the coronavirus outbreak.

The Dow dropped 329 points to end at 23,390.77 on Monday, while the S&P 500 fell 1% to 2,761.63. The Nasdaq 100 turned positive in late trading, surging 0.5% to finish at 8,192.42.

Shares of Caterpillar fell more than 8% after Bank of America analyst downgraded the stock from neutral to underperform. Amazon’s stock climbed over 6% after the company announced plans to hire additional 75,000 employees.

On Sunday, the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) signed a deal that will reduce the global oil output by 9.7 million barrels per day starting May. After rising earlier in the session, WTI crude for May delivery fell 1.5% to settle at $22.41 per barrel.

Coronavirus continues to be the main focus among investors, with the total number of global cases close to 2 million. The number of positive cases in the US has exceeded 582,500 with around 23,640 deaths.

What to watch: Investors will be closely monitoring the daily coronavirus cases in the country. US stocks are expected to rise during the early session today, with stock futures pointing towards a higher start. The US is scheduled to report data on import and export prices later in the day. Import prices, which fell 0.5% in February, are expected to decline 3.2% in March. Export prices are expected to fall 1.9% in March, after a 1.1% decline in February.

Other Markets: European indices were trading mixed at 9:00am GMT, with the German 30 and French 40 up 1.1% and 0.3%, respectively. The FTSE 100 bucked the trend and was down 0.7%.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

News shaping
the markets today

     

What else to watch today

     

Brazil’s IBC-Br economic activity index as well as the US Redbook index and speeches from Fed members.

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