Recognized as a leader in intermodal transports — an industry-specific term used to describe multi-purpose transportation — J.B. Hunt (NASDAQ:JBHT) is also famous for being one of the largest companies of its kind by market capitalization, a little under $10 billion. Despite its successes over the years, the chairman of the board for J.B. Hunt last week sold off “38,860 shares of the company at $82.97 per share,” according to a report from 24/7 Wall Street. That’s rather fortuitous considering that JBHT shares are currently trading hands at $82.22, saving the chairman more than $29,000 in the process.
Although the large sale is, in and of itself, not a decisive cause for alarm — many executive insiders routinely sell shares for a variety of reasons — both the transportation industry and the economy should worry investors. First, J.B. Hunt has been an underperformer this year, down nearly 2.5% since January. The company has not been able to gain positive momentum since April when its troubles began piling up in the markets. Second, the transportation industry has been the suck, down nearly 12% year-to-date and symptomatic of the troubles plaguing J.B. Hunt and its competitors.
There was a time when the news wasn’t so stacked up against the transport carrier. Prior to the release of second quarter earnings for fiscal year 2015, J.B. Hunt ran four consecutive earnings reports which exceeded Wall Street expectations. Some analysts assumed that the company would continue its financial winning streak. Unfortunately, when results were released for Q2, net income was a miss. Not by much, but it was enough to spook investors, which exited positions in a relatively orderly fashion.
However, such order may not last too long. J.B. Hunt’s competitors, which include Swift Transportation Co. (NYSE:SWFT) and Martin Transport, Ltd. (NASDAQ:MRTN) are hurting for the same reasons — lack of demand. Put simply, if sales or marginal profitability were actually improving, it would show in the technical markets and we wouldn’t be having this conversation. Professional traders — who presumably analyze the granularities of sector data all day long — are wising up to this trend and are voting with their wallets.
Technically, JBHT shares are tracing a classic bearish trend channel since the mid-April of this year. Overall, shares have formed a series of lower highs — each defined peak being lower than the one prior — and lower lows — each defined bottom lower than the prior. The velocity of bearishness seems to have died down significantly in recent trades (ie. the bottoms of July 6 and July 23 are virtually at parity) but there’s a big question as to whether this symbolizes a reversal. The July 24 session, though positive, is miniscule compared to the losses that have been incurred. The bulls will need to do a lot better to turn this shipment around.
We’re just not seeing it and that’s a red-flag as the underlying blue-chip indices begin to enter shaky ground.