Daily Report: 1/17/25 (Friday) - JB Hunt revenue dips but intermodal volume increases
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Market Summary:
MAJOR INDICES:
SPX increased +1.00% ($5,996.66), DJI increased +0.78% ($43,487.83), and IXIC increased +1.51% ($19,630.20). RUT added +0.40% ($2,275.88). The VIX fell -3.80% (15.97).
SECTORS & STOCKS:
Technology (XLK) increased +1.57% while Healthcare (XLV) fell -0.67%. JD.com, Inc. (JD) added +10.11% ($39.00/share), and J.B. Hunt Transportation Services, Inc. (JBHT) decreased -7.38% ($172.45/share).
INTERNATIONAL EQUITIES:
The MSCI EAFE ETF (EFA) increased +0.41% ($76.78), and the MSCI Emerging Market ETF (EEM) added +0.79% ($42.09). The MSCI China ETF (MCHI) rose +2.05% ($46.21), and the MSCI India ETF (INDA) increased +0.25% ($51.18).
US MACRO:
DXY increased +0.05% ($109.41), and the US 10-year Treasury note yield added +0.07% (4.6090%).
GLOBAL MACRO:
USD/JPY increased +0.69% (156.266), and GBP/USD fell -0.57% (1.2167). The Brazil 10-year yield rose +1.32% (15.117%), and the Canada 10-year yield decreased -1.35% (3.297%).
COMMODITIES:
Gold fell -0.40% ($2,740.00), and WTI Crude decreased -0.81% ($78.04/barrel). BTC increased +2.79% ($104,405.00).
(as of 9:46PM, 1/17/25)
Sources:
https://www.tradingview.com/markets/
https://www.sectorspdrs.com/sectortracker
Context:
The IXIC rose the most of the three main indices, driven by increases in Tesla (TSLA), Nvidia (NVDA), and Alphabet’s (GOOG) stock prices. This week, SPX and DJI have risen the most since the election in November. Healthcare stocks continued to struggle today as UnitedHealthCare Group (UNH) faces criticism for high prices, and Eli Lilly’s (LLY) rival, Novo Nordisk (NVO), will have its weight loss drug be part of a Medicare price negotiation. JD.com, Inc. (JD) shares rose after an analyst at Jefferies increased his price target, and JB Hunt (JBHT) fell after revenue came in lower than expected in their recent earnings report. Chinese stocks rallied due to positive sentiment around the Chinese economy, while Brazil continues to see high inflation despite tightening monetary policy.
Story of The Day: JB Hunt revenue dips but intermodal volume increases
Despite increasing its intermodal volume YoY, JB Hunt saw a 5% decline in overall revenue due to lower revenue per load in both its intermodal and trucking segments. Intermodal transportation uses trains and trucks to move freight and makes up “nearly half” of the company’s revenue. To support the increased volume in the intermodal segment, JB Hunt had to hire 800 intermodal drivers in addition to taking on other costs, which worsened the segment’s operating ratio to 92.7%. Company guidance for operating income between Q4 2024 and Q1 2025 is expected to fall by 20-25% due to seasonality. Described as a “continuation of the challenging freight environment” by CEO Shelley Simpson, JB Hunt has seen excess capacity in its truck and intermodal segments, which added up to $100 million “in aggregate operating costs.” On the other hand, the company did have a higher profit, reporting an EPS of $1.53 compared to $1.47 at the same time last year. It’s revenue-per-load, though down YoY, increased “sequentially for a second straight quarter.” JB Hunt also recently acquired BNSF Logistics’ brokerage operations, which added one-off asset-impairment charges but is expected to strengthen the company's “compelling value proposition for customers.”
Sources:
https://www.wsj.com/articles/j-b-hunts-fourth-quarter-revenue-falls-despite-higher-volumes-fda68b83
https://www.investopedia.com/jb-hunt-stock-sinks-as-q4-volumes-decline-8776421
https://www.freightwaves.com/news/j-b-hunts-record-intermodal-loads-came-with-higher-costs-in-q4
https://www.freightwaves.com/news/j-b-hunt-acquiring-bnsf-logistics-brokerage-unit
My Thoughts:
Even though the company struggled this quarter, it seems like leadership is being proactive about addressing margins and implementing cost-cutting strategies. JB Hunt also noted that “it’s seeing some customers secure capacity earlier than normal”, which, paired with its increased intermodal volumes, indicates that demand isn’t waning. This seems like a case of high expectations not being met, and with its strategic acquisition of BNSF’s logistics brokerage operations, the company is well-positioned to provide service when the tide turns.
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