On Wednesday, Goldman Sachs maintained a positive stance on shares of J.B. Hunt Transport Services (NASDAQ:JBHT), reiterating its Buy rating and increasing the price target to $194 from $189. The firm's analyst highlighted J.B. Hunt's third-quarter earnings per share (EPS) of $1.49, surpassing the Goldman Sachs and FactSet consensus estimates of $1.36 and $1.39, respectively.
The report noted that approximately half of the earnings before interest and taxes (EBIT) outperformance was attributed to the intermodal segment, where margins reached 7.2%, exceeding the forecast of 6.8%. This was supported by stronger-than-expected volume growth of 5% compared to the estimated decline of 1%, and a smaller yield decline of 5% versus the anticipated 6.5%.
Despite the intermodal margin remaining below J.B. Hunt's historical target range of 10%-12%, Goldman Sachs expressed cautious optimism. The stability of the margin, consistent with the first half of 2024, suggests that the intermodal business may be approaching a margin floor, assuming no further price drops.
In light of the third-quarter performance, Goldman Sachs has adjusted its price target for J.B. Hunt, while also revising its earnings estimates for the years 2025 and 2026. The revisions reflect a more conservative outlook for the dedicated and final mile segments following the third-quarter revenue trend, as well as a slightly slower start to the recovery in the first half of 2025. However, the core profit outlook for the intermodal segment remains virtually unchanged.
In other recent news, J.B. Hunt Transport Services showcased a strong third quarter with earnings and revenue figures surpassing analyst projections. The company's earnings per share reached $1.49, outperforming analyst predictions. The firm's overall quarterly revenue of $3.07 billion exceeded the projected $3.02 billion, largely due to a 5% year-over-year increase in intermodal volumes.
Barclays, Citi, and Evercore ISI have all adjusted their price targets for J.B. Hunt in light of these results. The company's robust performance has been attributed to improved margins in their brokerage business and an increase in intermodal volumes.
Moreover, J.B. Hunt repurchased approximately 1.2 million shares for $200 million during the quarter. These are among the recent developments for J.B. Hunt, reflecting the company's proactive steps in managing its financial health.
InvestingPro Insights
To complement Goldman Sachs' analysis of J.B. Hunt Transport Services (NASDAQ:JBHT), recent data from InvestingPro provides additional context for investors. Despite the company's strong third-quarter performance, InvestingPro data shows that J.B. Hunt's revenue growth has declined by 10.9% over the last twelve months, with a 6.51% decrease in the most recent quarter. This aligns with Goldman Sachs' more conservative outlook for certain segments.
However, J.B. Hunt maintains a solid financial foundation. An InvestingPro Tip highlights that the company operates with a moderate level of debt, which could provide flexibility as it navigates the current market challenges. Moreover, J.B. Hunt has maintained dividend payments for 21 consecutive years, demonstrating a commitment to shareholder returns even in fluctuating market conditions.
The company's P/E ratio stands at 29.81, suggesting investors are still willing to pay a premium for J.B. Hunt's shares despite the recent headwinds. This could reflect confidence in the company's long-term prospects, including the potential margin recovery in the intermodal segment that Goldman Sachs noted.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into J.B. Hunt's financial health and market position.
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