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J.B. Hunt Transport (JBHT +4%) is hitting the road at a brisk pace today after snapping back to delivering earnings and revenue upside in Q3 on a welcomed return to positive intermodal volumes. JBHT, an intermodal trucking company, has been trending sideways since April as many consecutive downbeat earnings reports and weak intermodal volumes deflated shareholders. Just before 2023, economic conditions turned; absent peak season activity leading up to the holidays in late 2022 served as a massive red flag. Demand conditions soured, creating intense headwinds for JBHT for several quarters. The environment has remained gloomy throughout 2024, with intermodal volumes struggling to grow in Q1 and Q2, earnings missing estimates by double-digits, and revenue falling short of consensus.

Given this history, investors are cheering JBHT's lively Q3 performance, which may have signaled a long-awaited turning point.

• Economic conditions are still unfavorable, as highlighted by JBHT's 17% drop in EPS yr/yr to $1.49 and a 3% decline in revenue to $3.07 bln. Inflationary cost pressures continued eroding the company's overall margin performance across each segment.
• Pricing remains the biggest lever for improving margins. However, too many bidders are competing for too little demand, an imbalance leading to pricing pressures. JBHT noted that it will be stuck with a significant portion of current pricing through 1H25. However, management maintained that pricing remains unsustainable over the long term. Also, JBHT recently observed shippers converting small amounts of freight from truck to rail, an uplifting development for the company's Intermodal segment, its largest and most critical business.
• Speaking of which, Intermodal volumes flipped back to positive territory in Q3, expanding by 5% yr/yr. Some of this growth was pulled forward, though JBHT is unsure how much, which could lead to relatively weaker volumes in Q4. Breaking it down, JBHT enjoyed a 7% jump in transcontinental volumes. Southern California outbound volumes were up by double digits, and East volumes edged 3% higher. JBHT reiterated its long-term view that a significant amount of freight should eventually be converted from over-the-road to intermodal.
• JBHT's other segments posted mixed results. Dedicated Contract Services continued to run into fleet size pressures due to customer downsizing and bankruptcies, but JBHT believes the market remains stable. In Final Mile, demand for bulky items, including furniture and appliances, stayed suppressed while customer churn ticked higher, clipping top and bottom-line results. In Integrated Capacity Solutions, a constantly competitive brokerage environment pressures volumes, but JBHT was encouraged by its progress in stabilizing trends.

JBHT is finally breaking free from its sideways action after changing gears in Q3 and returning to delivering upbeat numbers. However, the economic landscape remains troubling, keeping uncertainty elevated and potentially generating volatility over the near term. Still, the positive developments from Q3 were encouraging, setting a more enthusiastic tone ahead of peers' upcoming reports, including MRTN, KNX, ODFL, and XPO.