J.B. Hunt Leads Truckers Lower: Buy Them While They're Down?
J.B. Hunt’s(NASDAQ: JBHT) share price hit the skids following the Q4 2024 results but will not likely be down long, nor will the transportation industry with it. The results weren’t bad but tepid relative to analysts' expectations, leaving the freight recovery in doubt.
The freight market hit bottom in 2023 and 2024 but has yet to regain traction, but it will. Overcapacity and sluggish inventory replacement are expected to give way to rising volumes and spot rates in 2025. The forecasts vary, but a mid-to-high single-digit pace is expected for the freight industry, with strength building in the back half. Intermodal, a segment in which J.B. Hunt excels, will likely lead with growth in the mid-teens, supported by increased international demand.
The news impacted truckers and expediters across the board, with names like Knight-Swift Transportation (NYSE: KNX), XPO (NYSE: XPO), and Saia (NASDAQ: SAIA) all pulling back. However, the pullbacks were minimal and revealed strength within existing uptrends that have these stocks poised to advance this year. The Dow Jones Transportation Index fell less than 1% on the news, showing support above a cluster of critical moving averages forming a Golden Crossover. The Golden Crossover is a significant technical signal because it shows shifting market conditions and the aligning of short-, mid-, and long-term investor sentiment.
J.B. Hunt Has Mixed Quarter; Sustains Cash Flow and Capital Return
J.B. Hunt had a mixed quarter but not a terrible one, with revenue contracting slightly more than the consensus forecasted -4.3%. Weakness was driven by declines in revenue per load, number of loads, and volume in critical segments. However, the weakness was offset by productivity gains, including tightened capacity and improved efficiency, which has set for a levered rebound as 2025 progresses.
Segmentally, Integrated Capacity Solutions was the weakest, with a 15% contraction and net loss. Dedicated Contract Services and Final Mile Services contracted in the mid-single-digits and Intermodal only by 2%. The company doesn’t give guidance, but analysts are optimistic; they forecast revenue and earnings growth in 2025.
Although weaker than expected, the company’s earnings were sufficient to sustain balance sheet health and the capital return. The company is reducing its debt and freeing up cash flow to strengthen its solid balance sheet. Long-term debt and other liabilities are less than 0.5x equity and 0.2x assets, which puts it in a strong position. The capital return includes the dividend and share buybacks, which reduced the count by 0.5% in Q4, 2.6% for the year, and aided an incremental increase in book value.
Analysts Lower Targets for J.B. Hunt: See Value in This Stock
The analysts’ response to the news is to lower price targets. However, the revisions tracked by MarketBeat show a growing conviction in the pre-release consensus target of $92.50 and continue to rate it and others within the industry as a Moderate Buy. That implies a 12% upside for the stock and is likely a low target for the market. Once the rebound gains traction, analysts will likely increase their expectations for results and the stock price, leading to higher highs later in the year.
Institutional activity may cap gains for J.B. Hunt in Q1. The institutions are bullish on the transportation stock, having bought on balance in 2024, including Q1, Q2, and Q4, but sold into the Q3 rally. If that is repeated in 2025, the stock price will have difficulty maintaining upward momentum no matter how good the news is. Regarding their support, buying aligns with the low-end of the analysts' target range and a floor in the $156 to $166 region.
J.B. Hunt Down, But Not for Long
J.B. Hunt’s price action is down, but it won’t stay down long. The market is moving toward a solid support level, likely to result in a robust rebound this year. However, the rebound/recovery may not begin until the second, leaving this stock to trade within its range until then. The critical support levels are $166 and $156.
