Arkansas Public Companies See Mixed Stock Results After Recession

by Jan Cottingham  on Monday, Jul. 22, 2013 12:00 am  

On July 2, 2007, Page One of the Arkansas Democrat-Gazette featured a story about the Obama campaign’s fundraising exceeding that of the Clinton campaign, as in Hillary. The business section offered a story about the new trend of using Wi-Fi to operate cell phones.

As for the markets, the Dow stood at 13,535.43. The Nasdaq, on which most Arkansas-based public companies trade, closed at 2,632.3. The S&P 500 was at 1519.43.

And then the monsters came.

Four years after the Great Recession officially ended (June 2009), a look at the stock performance of the 18 publicly traded companies headquartered in Arkansas shows mixed results. Nine are winners, while nine remain below the price they marked as of close of trading on July 2, 2007, the first day of trading in third-quarter 2007.

We chose to examine the companies’ stock performance between that date and six years later, July 1, 2013. Like most such exercises, it’s somewhat arbitrary. U.S. housing starts started slipping in late 2006 and early 2007, indicating softening of the real estate market, a softening that ended in a meltdown. But in the middle of 2007 few people were expecting economic Armageddon.

We’re wiser (or more traumatized) now. And almost five years after the headline “Crisis Pushes Confidence to Record Low” (Wall Street Journal, Oct. 28, 2008), maybe we should remember what it was about the autumn of 2008 that pushed confidence — and the stock market — so low, just how far it has recovered since and how widely the stock of Arkansas’ public companies has fluctuated.

Trucking

The only winner in the transportation industry is — no surprise — J.B. Hunt Transport Services of Lowell. In the past six years its stock has increased by 143.55 percent, rising from an adjusted close of $28.15 on July 2, 2007, to 73.49 on July 1, 2013.

What has J.B. Hunt done right?

Brad Delco, a transportation analyst with Stephens Inc. of Little Rock, noting that he covers only J.B. Hunt, USA Truck and Arkansas Best, said J.B. Hunt in some ways is no longer a trucking company. Instead, it’s a “multifaceted transportation service provider.”

Most of J.B. Hunt’s growth has been in the intermodal segment, the segment he calls the company’s “bread and butter,” which has been growing for the past decade. Rail efficiencies and on-time service have improved, Delco said, causing shippers to realize that they “can convert what were traditional truckload shipments, put them in a J.B. Hunt container and ship them by rail. It’s a cheaper rate and it saves money on fuel. And so J.B. Hunt has certainly benefited from that.”

The high cost of transforming their transportation models has largely prevented the other Arkansas carriers from following suit, he said, though USA Truck has taken steps in that direction and “seen good growth out of it. But they haven’t been in a position to make the type of investments needed in order to really grow that business the same way that J.B. Hunt has.”

 

 

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