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Shares of J.B. Hunt took a hit Tuesday after the company's quarterly earnings report Monday said poor weather in the Midwest and a list of other hurdles hurt the company's earnings.

The stock fell $5.22, or almost 5 percent, to close Tuesday at $100.28. The shares have traded as high as $131.74 and as low as $88.38 the past 52 weeks.

A harsh winter, a newly implemented railroad policy that created head winds for haulers, and the trade battle with China were all expected to affect U.S. freight firms in the first quarter, analysts said.

"All those things listed have impacted either demand or operations, and trying to guess or figure out what's going to be impacting the business going forward versus temporary ... is the debate that's being discussed right now," said Brad Delco, a Stephens Inc. analyst who covers transportation and trucking.

The Lowell-based freight firm posted earnings per share of $1.09, about 16 cents short of a $1.25 analyst consensus from Bloomberg Intelligence, signaling worse-than-expected performance.

Head winds for J.B. Hunt strengthened through the quarter, said Lee Klaskow, a senior transportation and logistics analyst at Bloomberg Intelligence, in an email. They included higher rail costs related to longtime partner BNSF Railway and a hangover from a frenzy to ship products before tariffs took effect.

"It looks like these challenges will weigh on intermodal this quarter and get better through the second half," Klaskow said.

While its logistics and trucking businesses had strong results for the quarter, company executives said in the latest earnings call that the railroad carrier division did not perform as well.

"In intermodal, volume, or lack thereof, is obviously the main story," said David Mee, J.B. Hunt's chief financial officer.

Going into the quarter, the company expected challenges such as planned ramp closings and train reroutings.

"But the service disruptions from weather issues starting in late January and progressing through late February actually caused some freight to divert back to the highway, in addition to loads being outright canceled," Mee said in the earnings call.

"When the service began to improve, we did not see a snap-back in customer demand in March, which was our biggest surprise and frankly missed our expectations," he said.

Intermodal freight volumes were down 7 percent in January, down 6 percent in February and down 7 percent in March, Mee said, citing company data. He did not provide actual figures in the call.

Intermodal, the movement of some J.B. Hunt freight trailers by rail for part of a shipment, is J.B. Hunt's largest segment, responsible for 55 percent of its revenue, according to Klaskow. Highway share increased as a direct result of railway share declining, he said in an email.

Business on 04/17/2019

Print Headline: J.B. Hunt's shares sink 5% after 1Q earnings reported

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