J.B. Hunt Drops Most Since 2012 After Cutting Profit Outlook

  • Operating income now expected to rise only 5%, company says
  • Glut of rigs on road forces truckers to drop freight prices

J.B. Hunt Transport Services Inc., the largest trucker by market value, fell the most in four years after lowering its growth forecast for sales and profit amid a decline in freight rates.

Operating income will only increase 5 percent this year, down from last month’s estimate of an 8 percent to 11 percent expansion, the company said in a slide presentation Monday. Revenue is likely to advance 7 percent, down from an earlier projection of as much as 12 percent.

A glut of rigs on the road and lackluster demand for consumer goods are forcing truckers to lower their prices to haul freight. Average spot rates for truckloads fell 4 percent in the week ending July 15, sinking to a two-month low, according to Bloomberg Intelligence, which cited data from Truckstop.com’s Market Demand Index.

“The cut to guidance is likely to challenge investor perceptions of a quality stock against the stark reality of a slow growth transport environment,” Brandon Oglenski, an analyst with Barclays Plc., wrote in a note on Monday.  

J.B. Hunt posted earnings of 92 cents a share in the second quarter, trailing the 97 cent average of 25 analyst estimates compiled by Bloomberg. J.B. Hunt fell 4.7 percent to close at $81.27 in New York, the biggest decline since July 2012. 

The stock had gained 16 percent this year through July 15, outpacing the 5.8 percent gain for the Standard & Poor’s 500 Index over the same period, as investors saw J.B. Hunt as one of the best-managed trucking companies.
 

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