As the economy has rebounded and so too has the transportation sector. After all, it's not too easy for companies to sell more "stuff" and not need additional transportation services. While the railroads have been on a much-discussed run since 2009, trucking companies have had a more mixed performance.

TUTORIAL: Financial Statements

Making matters a little more complicated, although J.B. Hunt (Nasdaq:JBHT) is often listed among the trucking companies, that is not really an accurate depiction. In point of fact, intermodal business is the single largest component of the company's revenue and income. What's more, the differences in JBHT's business model seem to go a long way towards explaining why this company has been a solid performer. (To read more on financial statements, see 12 Things You Need To Know About Finncial Statements.)

Strong Demand Leads to Strong Quarter
J.B. Hunt reported a better than 18% jump in revenue for the first quarter, with 13% growth once the impact of fuel surcharges are stripped out of the picture. Intermodal was the leader both in growth and scale, as revenue grew 23% here to $577 million (about 58% of the total) on the back of 15% volume growth. Dedicated contract services saw 15% revenue growth, while revenue from the truck segment rose 6% despite an 11% decrease in loads and a 12% decrease in tractors on the road.

Profitability improved overall, but it was a bit more of a mixed bag. Overall operating income rose 33%, with growth in operating income from intermodal totaling about 32%. There was not much growth in the dedicated business (up 1%), while there was a significant year-on-year improvement in the truck business. (To learn how to breakdown income statements, check out Understanding The Income Statement.)

Higher Fuel? No Problem
Trucking companies like Old Dominion (Nasdaq:ODFL), Knight (NYSE:KNX) and Swift (Nasdaq:SWFT) all have mechanisms for passing on higher fuel costs through surcharges, but J.B. Hunt can actually see more business from higher fuel prices. When fuel costs go up, the efficiency advantages of rail transport and intermodal (which relies significantly on rail) really stand out and customers increasingly switch to intermodal. That means more business for J.B. Hunt. Better still, intermodal operations are highly profitable on an ROIC basis, so it amounts to a win-win for J.B. Hunt.

What's good for J.B. Hunt in intermodal should also be good for major partners like Norfolk Southern (NYSE:NSC) and Berkshire Hathaway's (NYSE:BRK.A) Burlington Northern. That said, by keeping a trucking business and offering a range of services and transportation alternatives for customers, J.B. Hunt has options that pure plays like Echo Global (Nasdaq:ECHO) lack. (For more on Intermodal industry, check out Railroad, Trucking Earnings Growth Set to Keep Rolling.)

The Bottom Line
As long as consumer spending and economic activity keep improving, there's going to be solid demand for transportation. That's good for the rails, that's good for the intermodals and that's good for the truckers. The truckers, though, have issues with higher fuel prices and that gives J.B. Hunt's large intermodal exposure a real advantage.

Now, all of that said, there is still a right price for every asset and J.B. Hunt's current stock price seems to fully reflect the bull-case scenario. That does not preclude the stock going up further or the company outperforming expectations; it just means that the probable risk-benefit trade-off in the shares isn't so favorable right now. (Read How to Outperform The Market to learn more.)

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