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J.B. Hunt Transport (JBHT -7%) hits fresh 52-week lows today despite delivering narrow earnings and sales beats in Q1. The intermodal trucking company has been caught amid unfavorable trade policies and a sluggish economic recovery. The stock was already turning lower before "Liberation Day" earlier this month, weighed down by what management has called a "freight recession." Pricing has remained weak as too much capacity chases too few goods, eroding JBHT's margins and profits.

• JBHT conceded that its Q1 results were not up to par, displeased with its returns and efforts to eliminate costs. Last quarter, JBHT accentuated that its top priorities were repairing its margins and improving financial performance. However, operating income contracted by 8% yr/yr in Q1, leading to operating margins of 6.1%, a 50 bp drop yr/yr. Meanwhile, sales fell by 0.8% yr/yr to $2.92 bln; JBHT has not registered yr/yr sales growth since 4Q22. JBHT cited seasonally lower volume, rate pressures, and ongoing hikes in insurance premiums as culprits.
  • CEO Shelley Simpson remarked that the executive team explored options it can implement to more aggressively eliminate costs in some scenario planning analyses, stressing the need to stay fluid amid a dynamic economic environment filled with inflationary pressures, depressed consumer spending, and changing tariff policies.
• On the bright side, Intermodal volume jumped by 8% yr/yr, 3 pts higher than last quarter, supported by a 4% and 13% increase in transcontinental and eastern network loads, respectively. Management mentioned that customer demand trended in line with normal seasonality. In Dedicated Contract Services (DCS), JBHT's second-largest segment behind Intermodal, revenue edged 4% lower yr/yr. The company noted that some customers are taking longer than usual to execute contracts, employing a wait-and-see approach due to market uncertainty.
  • JBHT stated that within DCS, it anticipates a return to net fleet growth this year but cautioned that the timing of deals will largely influence its ability to return to positive revenue and operating income growth.
• Across JBHT's other segments, including Integrated Capacity Solutions (ICS), Final Mile Services (FMS), and Truckload (JBT), revenue fell across the board. In ICS, its customer count jumped by 20% yr/yr. In FMS, big and bulky product demand remained muted, a concerning trend for furniture retailers like Wayfair (W) and La-Z-Boy (LZB). Conversely, demand in JBHT's fulfillment network was positive, supported by off-price retail trends, a good sign for TJX (TJX), Ross Stores (ROST), and their peers. In JBT, service levels were strong, resulting in additional bid opportunities.
• Regarding tariffs, JBHT does not yet have a complete picture. Management stated that customers are planning for multiple scenarios, ultimately waiting for the dust to settle before changing their short and long-term business strategies.

Bottom line, JBHT's Q1 earnings beat was a pleasant surprise but insufficient to offset the overarching concerns related to tariffs, the economy, and the heightened uncertainty surrounding how everything will play out, keeping bears in the driver's seat today.