Earnings Previews: JB Hunt, Netflix, United Airlines

The three major U.S. equity indexes closed sharply lower on Friday, giving up the gains posted Thursday when the consumer price index report was interpreted as good news. The Dow Jones industrials ended the day down 1.34%, the S&P 500 closed 2.37% lower and the Nasdaq lost 3.08%. All 11 sectors closed lower, with consumer cyclicals and energy (both 3.7%) and materials (3.4%) posting the biggest drops. Health care (0.7%) was the only sector to end the day with a loss of less than 1%.

The first economic data of note due this week is the monthly report on new housing starts and building permits on Wednesday. The monthly report on existing home sales is due Thursday.

All three major indexes were trading higher early Monday.

Before markets opened Monday morning, Bank of America reported better-than-expected adjusted earnings per share (EPS) and revenue. The bank added $898 million to its provision for credit losses, a year-over-year increase of $1.5 billion. The stock traded up about 5% Monday morning.

Bank of New York Mellon also reported beating both the top-line and bottom-line estimates. The bank also reported a benefit of $30 million from releasing that amount from its credit loss provisions. The stock traded up 5.9% early Monday.

We already have previewed four companies (Albertsons, Goldman Sachs, Johnson & Johnson, Lockheed Martin) set to report quarterly results before markets open on Tuesday.

After markets close Tuesday, these three companies will share their quarterly results.

J.B. Hunt

Trucking and logistics company J.B. Hunt Transport Services Inc. (NASDAQ: JBHT) has seen its share price decline by about 6.9% over the past 12 months. The stock posted a 52-week high in mid-March and plummeted on a weak outlook given the soaring price of fuel. Since posting that high, the shares have dropped nearly 25%. Analysts have begun to throw shade on transportation stocks, based largely on forecasts for a limited 2022 holiday season. Volumes are expected to be down and so is pricing.

Of 26 analysts covering the stock, 15 have a Buy or Strong Buy rating while the others rate the shares at Hold. At a recent price of around $163.200 a share, the upside potential based on a median price target of $190.00 is 16.4%. At the high price target of $230.00, the upside potential is nearly 41%.

Third-quarter revenue is forecast at $3.81 billion, which would be down 0.8% sequentially but up 21.3% year over year. Adjusted EPS are forecast at $2.46, up 1.5% sequentially and by 30.9% year over year. For the full 2022 fiscal year, analysts expect to see EPS of $9.64, up 35.1%, on sales of $14.92 billion, up 22.7%.

J.B. Hunt shares trade at 16.9 times expected 2022 EPS, 16.8 times estimated 2023 earnings of $9.71 and 15.9 times estimated 2024 earnings of $10.24 per share. The stock’s 52-week trading range is $153.92 to $218.18. The company pays an annual dividend of $1.60 (yield of 0.98%). Total shareholder return for the past 12 months was negative 6.1%.

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