JB Hunt Transport Services (JBHT - Get Report) shares traded sharply higher Tuesday after the second-largest U.S. trucking group posted stronger-than-expected second quarter revenues and pointed to a pick-up in overall volumes in the second half of the year.
JB Hunt said earnings for the three months ending in June came in at $1.23 per share, down 10.2% from the same period last year and well shy of the Street consensus forecast of $1.35 per share. Group revenues, however, improved 6% to $2.26 billion, just ahead of analysts' forecasts, and a 14 cents per share one-off charge to earnings allowed investors to paint a stronger-than-expected picture for the transport sector ahead of earnings this week from rail operators Union Pacific Corp. (UNP - Get Report) and Kansas City Southern (KSU - Get Report) .
"The volume increases we should see in the second half of the year, are from a group of customers, not foreign individual customer or two customers" CEO John Roberts told investors on a conference call late Monday. "It was not a price play and I think you will see that play out in the next few quarters when you start looking at the revenue per loads. It's more of a service play in terms of the quality of service and the differentiation that we've been able to work with our customers on through difficult time last year."
"If you look at the third quarter, we believe there's a month or two in there that will hit positive comps versus the third quarter last year. And we should hit positive comps in the fourth quarter, in general," he added.
JB Hunt shares were marked 6.5% higher Tuesday to change hands at $98.92 each, a move that would edge the stock into positive territory for the year.
While results were generally in line with expectations on an adjusted basis, we sense that the sentiment coming into Q2/19 results and the outlook update were more pessimistic than what was reported," said BMO Capital Markets analyst Fadi Chamoun. "We suspect that JBHT shares could respond favorably."
"Demand trends are weak while pricing growth is decelerating, and we continue to see the U.S. Class 1 railroads' operational strategies as a potential source of pressure on intermodal volumes and operating margins," he added.