JB Hunt Transport Services (NASDAQ:JBHT) shares fell as much as 9% in premarket trading on Wednesday after the US transportation company warned of a decline in earnings and highlighted rising operating costs.
Speaking at a Morgan Stanley conference, the company said it expects earnings to decrease by between 5% and 10% from the second quarter to the third quarter.
JB Hunt noted that it does not typically provide updates on earnings trends during a quarter, making the announcement a departure from its usual disclosure practices.
Higher Costs Expected to Affect Third-Quarter Earnings
Barclays analyst Brandon Oglenski said JB Hunt had provided an unusual earnings outlook despite expressing a more favourable view of current freight market conditions.
According to Oglenski, the company indicated that freight demand appeared to have begun improving, but higher costs were expected to affect near-term profitability.
The analyst identified increased fuel prices and associated surcharges as likely contributors to the revised earnings expectations.
The warning indicates that improving freight demand may not be sufficient to offset the company’s higher operating expenses during the quarter.
Shares Decline Following Earnings Update
JB Hunt shares dropped as much as 9% before the opening of regular US trading following the announcement.
The company provided an expected sequential earnings decline of 5% to 10%, but the supplied update did not include a revised earnings-per-share forecast or a detailed breakdown of the anticipated cost increases.
Investors will receive further information on the company’s financial performance when JB Hunt reports its third-quarter results.
J.B. Hunt Transport Services stock price
