File this under "be careful what you wish for" - while J.B. Hunt (JBHT) traded sharply higher from March to August on expectations of a sharp recovery in the U.S. freight market, that turn created some significant operational challenges for J.B. Hunt and the company wasn't fully up to the task, leading to weaker than expected results in a recovering market.
On one hand, the rail and warehouse congestion issues and labor shortages are understandable issues that would have challenged any company. On the other hand, isn't the argument for paying a double-digit multiple to EBITDA for J.B. Hunt based on the company's expertise in handling and smoothing over freight logistics challenges? I'm tempted to look at this as a "buy the pullback" opportunity, if not for management's warnings that the congestion/frictional issues that hit the third quarter are going to continue into the fourth quarter and that margins would be under pressure until next year's spring repricing cycle (so, Q2'21).
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Improving Freight Demand Creates Material Hurdles For J.B. Hunt
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