What CSX and J.B. Hunt Earnings Say About the Economy

CSX reported its earnings as $0.51 per share on $3.20 billion in revenue, against Thomson Reuters estimates of $0.48 in earnings per share and $3.15 billion in revenue. In the third quarter of the previous year it reported its earnings as $0.46 per share and revenue of $3.00 billion.

Reportedly, this past weekend CSX was approached by Canadian Pacific, which resulted in a 5.9% jump in shares on Monday to close at $31.70.

The company stated in its earnings report that it expects modest earnings growth for 2014, with expectations of double-digit earnings growth and margin expansion in 2015.

CSX shares remained relatively the same opening and closing the quarter, but the stock did fluctuate a fair amount in this three-month span. The range for the quarter was $29.07 to $32.66.

Shares of CSX posted a strong day Tuesday, up 2.87% to $32.61 from the previous close of $31.70. In the after-hours, the share price was up about 3% to $33.60 on news of the earnings.

CSX’s shares have a consensus analyst price target of $33.29 and a 52-week range of $25.28 to $34.09. It has a market cap of more than $31 billion.

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J.B. Hunt reported $0.87 in earnings per share and $1.6o billion in revenues, against Thomson Reuters consensus estimates of $0.84 per share and $1.59 billion. The fourth quarter has estimates of $0.89 in earnings per share and $1.63 billion in revenue.

Load growth in its Intermodal unit of 8%, improved asset productivity and implemented rate increases in Dedicated Contract Services of 13% and an increase in both load volume and revenue per load in Integrated Capacity Solutions of 35% all helped to drive up segment revenue.

The train segment, Intermodal (JBI), is the largest revenue generator out of J.B. Hunt’s segments at $964 million. The Eastern network growth was 19% and the transcontinental growth was 2% from the previous year.

However, J.B. Hunt reported a total of $837 million outstanding on various debt instruments, up roughly 22% from $687 million in the third quarter in 2013.

The Truck segment (JBT) saw its revenues fall 1% to $96 million. Despite the company noting an operating income increase of 569% to $4.3 million, the favorable changes this quarter of increased rates per loaded mile and a smaller trailer fleet were offset by driver and independent contractor-related costs. These costs were also realized in the Dedicated Contract Services segment (DCS).

The trucking industry has recently been experiencing a scarcity in drivers, resulting in increasing rates that are eventually passed on to the consumers. Trucking companies will generally experience driver shortages as an economy ramps up due to drivers finding work in factories or construction.

Shares for J.B. Hunt moved up over 1% from the open of the quarter at $73.18 to the close at $74.05. However, the shares did take a large uptick, but returned to the quarter’s opening level. The range on the quarter was $71.73 to $79.79.

Shares closed at $73.47 Tuesday, up 3% from the previous close of $71.30. The range on the day was $72.79 to $76.36. In the after-hours, shares were initially down about 3% as far as $71.18, but later shares were holding less than 1% under the close at $73.45.

J.B. Hunt’s stock has a consensus analyst price target of $83.50 and a 52-week range of $69.33 to $79.89. The company has a market cap of about $8 billion.

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