Key insights
- J.B. Hunt's stock fell nearly 13% after CFO Brad Delco warned of a 5% to 10% sequential earnings drop in Q3 due to rising driver and fuel costs. These cost pressures, including $25 million in driver expenses and $10 million in fuel headwinds, are attributed to abnormal fuel price swings. Analysts had previously expected 9% sequential earnings growth for the third quarter.
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A shipping giant’s stock is tumbling on worries that higher fuel prices are going to hit its bottom line.
Shares of J.B. Hunt (JBHT) were down nearly 13% in recent trading, leading decliners in the S&P 500 after executives warned higher driver and fuel-related costs are going to squeeze its results this quarter.
CFO Brad Delco said at a conference that “in light of these costs that are sort of hitting us, we are expecting our Q2 to Q3 earnings to actually drop 5% to 10%,” according to a transcript provided by AlphaSense. Analysts surveyed by Visible Alpha were expecting third-quarter earnings to grow 9% sequentially.
Speaking at the Morgan Stanley Laguna Industrials Conference yesterday, Delco said incremental cost pressures include roughly $25 million in additional driver-related expenses and at least $10 million in fuel headwinds, amid “some of the most radical and abnormal swings in fuel prices that we’ve ever seen.”
Oil prices have surged in recent months as the war between the U.S. and Iran drags on, disrupting supplies and putting upward pressure on inflation.
Even with Wednesday’s drop, J.B. Hunt shares have added more than 20% this year.