Why is J.B. Hunt Transportation stock down so much today?

Cost escalation and weak demand led toJ.B. Hunt Transportation Services, Inc. (NASDAQ: JBHT)Earnings have been poor, and the company doesn't see things getting better anytime soon. Shares of J.B. Hunt were down 9% as of 11:30 a.m. ET.

Weakness in the transportation market

J.B. Hunt is a trucking and logistics company that specializes in the transportation of intermodal containers, which are rectangular boxes used to move seamlessly from ships to railroads to trucks. The company reported first-quarter revenue of $2.94 billion and earnings of $1.22 per share, well below Wall Street estimates of $3.12 billion in sales and $1.52 per share.

Revenues declined 9% year-over-year, and operating income declined 30%, reflecting the impact of weaker demand and higher costs, according to J.B. Hunt, who said that operating income as a percentage of revenues declined as a result of a surge in wages and benefits, equipment maintenance costs, and insurance rates.

The company's freight forwarding division shipped 22% less freight in the quarter than in the same period last year.

Is J.B. Hunt's Stock Worth Buying After Poor Earnings?

Trucking is a cyclical business, and J.B. Hunt has a reputation for being a solid operator, but no transportation company can do much if there isn't enough demand for its services. In February, management warned of weak rate negotiations in 2024, and first-quarter results seem to bear that out.

On the expense side, J.B. Hunt could do little but accept lower margins and wait for demand and pricing power to recover.

The decline in J.B. Hunt's stock price could be an opportunity for long-term investors looking to buy a strong carrier in the transportation industry. But given the uncertainty of when demand will rise, there's no reason to rush in today.

Should you invest $1,000 in J.B. Hunt Transportation Services today?

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Lou Whiteman does not own any of the shares listed above.The Motley Fool does not own any of the shares listed above.The Motley Fool has a disclosure policy.

Why is J.B. Hunt Transportation stock down so much today?