- Despite ongoing improvement in freight volumes in the third quarter, J.B. Hunt was hamstrung by serious rail and warehouse congestion issues, as well as higher purchased transportation costs.
- The headwinds in the intermodal business seem likely to last through the fourth quarter, and margins will be under pressure until new pricing takes hold in Q2'21.
- "Buy on a pullback" always sounds like great advice until the pullback comes and you have to figure out whether the issues that caused the pullback are long-lasting or temporary.
- I believe J.B. Hunt's long-term model is still very much intact, and with an 11.5x multiple supporting a fair value above $144, this is a borderline buy call.
For further details see:
Improving Freight Demand Creates Material Hurdles For J.B. Hunt