JBHT 3Q25 - Beat on the top and bottom line! Bull case $230

Cheat Sheets

October 16, 2025

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J.B. Hunt Investment Report - Q3 2025 Crushes Estimates & EPS +18% to $1.76

J.B. HUNT TRANSPORT SERVICES (JBHT)

🚛 Logistics Leader | EPS $1.76 Crushes $1.46 Est (+20%), Operating Income +8%, Intermodal +12%

Q3 2025: Margin Repair Success | $20M Cost Savings in Quarter | Intermodal NPS 53 | Record Safety

💰 Market Cap: $14.2B | 🏢 Employees: 33,650 | 🚚 12,048 Dedicated Trucks | 122K+ Equipment
👩‍💼 CEO Shelley Simpson | 🎯 Intermodal, Dedicated, ICS, Final Mile | 💎 64 Years Old (Founded 1961)
$165.05
📈 +$26.22 (+18.89%) Today
-16.2% YTD
Price Target Scenarios

18-Month Horizon (Mid-2027 Targets) - Based on Current Price $165.05

$230.00
Bull Case (+39%)
Freight Recovery Accelerates
Rail Consolidation Benefits
📊 Valuation:
2027E EPS: $11.50 × 20x P/E = $230/share
🚀 What's Needed:
Freight market tight 2026+ • Intermodal volumes +8-10% annually • $100M cost savings fully realized • Operating margins 10%+ sustained • Dedicated contract wins accelerate • Rail consolidation creates new opportunities • ICS brokerage turns profitable • Final Mile stabilizes and grows • Highway capacity exits accelerate • Technology automation drives 15%+ margin gains • Market rerates to 20x P/E
$185.00
Base Case (+12%)
Gradual Market Recovery
Margin Targets Hit
📊 Valuation:
2027E EPS: $10.25 × 18x P/E = $185/share
⚖️ What's Needed:
Freight market stabilizes 2026 • Intermodal volumes +4-5% annually • Cost savings $75M+ realized • Operating margins recover to 8-9% • Dedicated fleet modest growth resumes • ICS operating loss narrows • Final Mile demand soft but stable • Rail partnerships remain strong • Technology delivers 10% margin improvement • Market values at 17-19x P/E (historical range)
$110.00
Bear Case (-33%)
Prolonged Freight Recession
Margin Compression
📊 Valuation:
2027E EPS: $6.50 × 17x P/E = $110/share
🔻 What Could Go Wrong:
Economic recession • Freight volumes decline further • Intermodal volumes -5% or worse • Cost savings fail to materialize • Operating margins compress to 5-6% • Rail consolidation disrupts service • Dedicated customer losses accelerate • ICS losses widen • Final Mile demand collapses • Capacity returns too quickly • Price competition intensifies • Technology investments fail to deliver ROI • Market derates to 14-17x P/E
Bottom Line for Retail Investors
🏆
Massive EPS Beat - Margins Repairing
EPS $1.76 destroyed $1.46 estimate (+20%!). Revenue $3.05B beat $3.02B est. Operating income +8% despite flat revenue. Intermodal OI +12%. Shelley: "Proud of our people for delivering this improved financial performance. While the market hasn't returned yet, notable improvement in financial performance should serve as testament to talent and capabilities throughout our organization." Brad: "Productivity and cost management efforts more than offset inflation in insurance, wages, and equipment costs."
💎
Cost Discipline - Spreadsheet With 100+ Line Items
Brad: "We have a spreadsheet with over 100 lines of things we're attacking. Greater than $20M eliminated in Q3. Goal is something far greater than $100M - we're comfortable sharing $100M." Technology automation + process improvements + asset utilization gains. DCS maintenance teams creating more uptime at lower cost. "Intent is to demonstrate progress in reported results rather than just speak to them." Most benefits realize 2026.
📈
Intermodal: Technology + Network Balance = Margin Explosion
Intermodal OI +12% YoY despite volumes -1%. Darren: "Technology enhancements at end of Q2 defined new customer flexibility. Drove real efficiency in driver base, drove out empty miles on drayage. These are sustainable." Bid strategy: grow volumes + improve price + improve balance = all working. Pricing improvements in headhauls. Sequential acceleration visible. Peak season surcharges NOT the driver - disappointed in West Coast demand, adjusted peak program mid-quarter. Steel wheel interchange ~50% of transcontinental = dynamic agility at scale.
⚠️
Freight Demand Soft + Market Still Unhealthy
Revenue flat YoY - demand soft. Spencer: "Overall demand trended below normal seasonality for much of quarter outside seasonal lift at quarter end." Brad: "Our industry is NOT in a healthy spot. We need something in single digits next year to at least get back on healthier path to margin recovery, to reinvestable levels." Shelley: "Market has been in same place for more than 3 years - surprise to J.B. Hunt and shippers. Customers prepared a year ago for more price but managing their costs. Until freight not picked up at dock, they won't make meaningful change." FMS operating income -42%.

📊 What Just Happened: EPS Crushes by 20%, Operating Income +8%, Intermodal Shines +12%

Revenue Flat at $3.05B (Beat by $30M) • EPS $1.76 (Beat by $0.30!) • Net Income +12.3% to $170.8M • Operating Income +8% to $242.7M • Intermodal Operating Income +12% • DCS Operating Income +9% • ICS Loss Narrowed to -$0.8M • Bought Back $230M Stock in Q3 (1.6M Shares) • $780M+ YTD Buybacks (5.4M Shares) • $20M+ Cost Savings This Quarter • Dividend $0.44 Declared • 2025 Operating Income Guidance: Flat vs 2024 💪

💰
$3.05B
Q3 2025 Revenue
Flat YoY
⚡
+8%
Operating Income
$242.7M
🎯
$1.76
EPS Q3
Beat $1.46 Est
🚀
+12%
Intermodal OI
$125M

📞 Key Q3 2025 Earnings Call Highlights

🎊
Intermodal Margins CRUSHING IT
Operating income +12% despite volumes only -1%. How? Tech upgrades drove efficiency in drivers + cut empty miles. Sequential trend accelerating: July -3%, Aug -2%, Sept FLAT. TransCon -6% but Eastern +6%. Most efficient dray service ever in September. NPS score 53 = customers love the service.
🚨
$100M Cost Cuts = $20M Already Done
Management attacking 100+ line items. Already cut $20M in Q3. Target actually "far greater than $100M" but being conservative. Examples: better network balance, maintenance efficiency, less empty miles, tech automation. Most savings hit 2026 = setup for margin explosion when freight recovers.
💎
AI & Automation Going HARD
50 AI agents deployed. 60% of carrier calls automated. 73% of orders auto-accepted. 80% of invoices paid without human touch. Handles 2M quotes per year automatically. Saved 100K+ hours across teams. Record safety 3 years straight. This = sustainable cost advantage competitors can't match.
🔬
Dedicated: Losses Behind, Growth Ahead
Sold 280 trucks in Q3. Known fleet losses done in July. Kept double-digit margins while losing mature accounts AND starting new ones = impressive execution. Target 800-1,000 new trucks/year. Strong pipeline. 2025 operating income flat vs 2024, then growth accelerates 2026+.

📍 CEO: "Executing 3 priorities: operational excellence, scaling investments, repairing margins. Highly confident we're building a stronger company for growth ahead."

🌍 Rail Consolidation: "Navigated 7 prior railroad mergers. Long-term agreements with NS, CSX, BNSF. Nothing requires our Norfolk Southern business to move. We'll adapt like always."

💰 Volume Momentum: "Tech upgrades unlocked new customer flexibility. Drove efficiency we can sustain. ~50% of transcontinental uses steel wheel interchange = dynamic flexibility at scale."

🔮 Capacity Crunch Coming: "Capacity exits accelerating. 200K non-domiciled CDL impact is real + cabotage + border issues. Seeing tightness in 8-10 markets. First time ever: spot rates UP while volumes DOWN."

🚀 Why JBHT Bulls Are Right
💎
Cost Savings Spreadsheet: 100+ Line Items
Brad: "We have a spreadsheet with over 100 lines of things we're attacking. Very healthy debates about what's structural vs temporary. Goal is something far greater than $100M - comfortable sharing $100M." Greater than $20M eliminated in Q3. Three buckets: efficiency/productivity (including back office), asset utilization, and technology. "Intent is to demonstrate in reported results rather than just speak to them." Once $100M fully realized = massive EPS boost.
⚡
Intermodal: Technology Unlocked Sustainable Efficiency
Darren: "Technology enhancements implemented during summer really began at end of Q2. Helped define new flexibility customers had given us. Drove real efficiency in driver base. Drove out empty miles on drayage system. These are areas we feel are sustainable." Almost record tractor utilization in dray. Operating income +12% on flat volumes = proof margins repairing structurally. If volumes turn positive + these margins hold = explosive earnings growth.
👑
Capacity Exits Accelerating - 200K Non-Dom Impact
Spencer: "Capacity bubble may be deflating as we speak. Pace of exits accelerating." Nick: "200,000 number fairly legit plus other factors - cabotage, border drivers. Seeing tightness in 8-10 markets. First time in history we've seen spot rates up versus volumes down - disconnnect due to enforcement activity." When freight recovers + capacity tight = pricing power. JBHT positioned to capture share with superior service (NPS 53).
🚀
$780M+ Buybacks YTD + Strong Balance Sheet
Brad: "Over $780M or 5.4M shares purchased year to date. Maintaining leverage around target of one-time trailing 12-month EBITDA. Balance sheet remains healthy. Strong cash flow generation allows us to be opportunistic with share repurchases." Shelley: "We're not satisfied. More work to do. Growth company with highest service across all five business units - highest consistency since I've been with company." Analysts raising targets: JP Morgan $176, BMO $180, Citi $175, BofA $175.
🐻 Why JBHT Bears Have Valid Concerns
📉
Industry "NOT in Healthy Spot" - CFO Quote
Brad: "Our industry is not in a healthy spot. Most who've covered this industry for a long time know that. We need something in single digits next year to at least get back on healthier path to margin recovery, to reinvestable levels." Revenue flat. Volumes down across segments. Shelley: "Had to fight so hard for 1% and 2% price when inflation is so much more." If recession hits = volumes fall 10-15% = margins compress despite cost cuts.
🏥
Rail Consolidation: No Requirement to Move Traffic
Darren: "There's nothing about a future state new railroad that would mean our Norfolk Southern footprint would be required to change. BUT there are still a lot of unknowns." While JBHT has long-term agreements and navigated 7 prior mergers, service disruptions possible during integration. Could hurt volumes/margins near-term. Any rail service issues during transition = immediate customer impact and potential share loss.
💸
FMS Collapsing -42%, 2026 Appliance Loss Coming
Nick: "Business conditions remain challenged with soft demand for furniture, exercise equipment, appliances. Expect market conditions remain challenged through at least year-end. In 2026, we do anticipate losing some legacy appliance-related business." FMS revenue -5%, OI -42%. ICS still losing money (-$0.8M). If these segments don't stabilize = continued drag. Healthcare cost inflation + insurance renewal pressure ahead.
⚠️
Shippers Won't Change "Until Freight Not Picked Up"
Shelley: "Customers look at macro data, spot pricing, volumes. Until they actually experience it or feel it at dock level, until freight is not picked up, they won't make meaningful change. Things have to change from here." Stock $165.05 after +18.89% pop today. Still -16.2% YTD from $196+ high. Median analyst target $155 already below current price. If freight stays soft or worsens = stock trades back to $120-140. Market now pricing in optimism - any disappointment = sharp reversal. One bad quarter gives back all gains.

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.

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