Trucker fuel-use index up sharply
Analysts predict J.B. Hunt surge
The trucking industry experienced a lift in May, according to recent reports.
The University of California at Los Angeles and human-resource firm Ceridian said Tuesday that their Pulse of Commerce Index, which measures fuel consumed by the trucking industry, rose 0.8 percent in May.
It rose 0.1 percent in April and 0.3 percent in March. The positive trend has caused the three-month moving average to grow at a rate of 2.2 percent, a sign of economic growth in the industry. It marks a turnaround since March, when the three-month moving average was falling at a rate of 4.9 percent.
Arkansas’ slice of the industry has been growing as well. Analysts forecast that J.B. Hunt Transport Services Inc., based in Lowell, will post a 25 percent increase in earnings in its second quarter. J.B. Hunt’s second-quarter report will be released July 16.
“There’s really two arrows [in] J.B. Hunt’s quiver right now that are letting it outperform the overall economy,” said Jack Waldo, a transportation equity analyst with Stephens Inc., the
Little Rock investment firm. He cited two J.B. Hunt divisions as being industry leaders: its intermodal segment, which includes rail transport, and the company’s dedicated division, which offers equipment and expertise for customer solutions.
“J.B. Hunt is unique in the transportation industry,” Waldo said. “It continues to outpace the market both in terms of earnings and stock prices.”
Anthony Gallo, an analyst for Wells Fargo Securities LLC, released a report Tuesday that said a recent visit with J.B. Hunt confirmed his “favorable outlook.”
“We think current freight market conditions, while attractive, are not ‘strong,’ but nonetheless supportive of [Hunt’s] intermediate-term growth objectives and our earnings expectations,” Gallo wrote in the report. J.B. Hunt “remains one of our favorite growth stories within our universe.”
J.B. Hunt officials declined to comment for this story. The company in April reported first-quarter net income of $67.7 million on revenue of $1.2 billion.
Investment firm Blackrock Inc. reported Friday that it no longer owns more than 5 percent of J.B. Hunt’s common stock. It now owns nearly 5.8 million shares, or 4.93 percent of the company’s shares.
In addition to J.B. Hunt, Arkansas is home to three other publicly traded trucking companies: Arkansas Best Corp. in Fort Smith, P.A.M. Transportation Services Inc. in Tontitown and USA Truck Inc. in Van Buren.
Arkansas Best, the largest of those three companies and operator of ABF Freight System Inc., filed its first quarter report April 27. It reported a net loss of $18.16 million for the quarter that ended March 31, but the company said workers’ compensation claims accounted for 13 cents of the 18-cent-per-share loss, or 71 percent.
The company’s report also said its tonnage per day for the first quarter fell 10.6 percent, compared with the year-ago quarter.
Freight transportation research firm Wolfe Trahan & Co. released its latest report on the company in late April.
“We believe that [Arkansas Best] should swing back to profitability in [the second quarter], but we don’t have great visibility to where that could get for [the second quarter], and even beyond,” the report said.
Michael Pakko, chief economist at the University of Arkansas at Little Rock’s Institute for Economic Advancement, said nationally, 1.2 percent of the population is employed in the trucking industry, but in Arkansas, the number jumps to 3.4 percent.
“[The trucking industry] has been showing a little more weakness than some of the more conventional measures of activity, like industrial production or GDP growth,” Pakko said. “The improvement we’ve been seeing in recent months is an important change and a positive indication [for the economy].”
J.B. Hunt’s stock price rose 62 cents Friday to $55.39 per share. It started 2012 with a share price of $46.01. Arkansas Best also saw a 29-cent jump in its price per share Friday, closing at $12.26. The company started 2012 at $19.90.
P.A.M. Transportation saw a modest 7-cent gain to close Friday at $9.97 per share, compared with $9.63 at the start of the year. USA Truck added 5 cents Friday and closed at $5.45 per share, compared with a 2012 start of $7.74.