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Shares of J.B. Hunt Transport (JBHT) ended the week flat while the overall SP500 index lost 2% after the transportation company reported a strong first quarter earnings report.

First Quarter Results

J.B. Hunt reported net earnings of $68 million, or $0.57 per share compared to $0.40 last year. The analyst consensus was for earnings to come in at $0.52 per share. Revenues rose 17% to $1.17 billion, with all four segments of the company reporting revenue growth. Operating revenue excluding fuel charges rose 13%, with nominal revenue growth coming in a little higher due to higher fuel charges.

"We are driven to provide relevant transportation services that meet the evolving needs of our customers. The results of the first quarter provide ongoing confirmation for this disciplined and balanced strategy," according to CEO Roberts.

Valuation

The company ended its first quarter with $6 million in cash and a debt position of roughly $602 million, for a net debt position of $596 million. Trading at $56 per share, the company is valued at $6.5 billion which implies a 1.4 times annual revenues multiple and 25 times earnings.

The first quarter results confirm that J.B. Hunt is on track to report revenue growth in the high teens for the third year in a row. Simultaneously margins have expanded to 5.7% for the entire year of 2011, and even came in at 5.8% in the first quarter.

The company pays a quarterly dividend of $0.14 for an annual dividend yield of 1.0%. Furthermore the company still has $503 million left under two separate repurchase arrangements, although it did not repurchase any shares during the quarter.

Investment Thesis

After the earnings announcement shares have hit all time highs around $56 per share. Shares have seen a swift recovery from lows of $36 early October 2011 and traded up some 50% in little over half a year.

The company has great operational excellence in terms of revenue growth and margin expansion in an industry which lacks structural profitability. Valued at 22 times 2012's earnings the shares are anything but an outright buy.

I have no strong opinion regarding the company, although the strong report could function as a trigger for a short term spike towards $60.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.