Hub Group, Inc. (NASDAQ: HUBG)

Sector: Industrials Industry: Integrated Freight & Logistics CIK: 0000940942
Market Cap 2.98 Bn
P/B 7.70
P/E 65.88
P/S 1.57
ROIC (Qtr) 4.92
Div Yield % 0.31
Rev 1y % (Qtr) -5.31
Total Debt (Qtr) 498.76 Mn
Debt/Equity (Qtr) 0.29
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About

Hub Group, Inc., often recognized by its stock symbol HUBG, is a prominent player in the supply chain solutions industry. The company, founded in 1971, has grown through a combination of organic growth, acquisitions, and strategic partnerships. Hub Group's primary business activities encompass intermodal and transportation solutions, logistics, and brokerage services, extending its operations across various countries and regions. Hub Group generates revenue through a multitude of service offerings, including intermodal and dedicated trucking, transportation...

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Investment thesis

Bull case

  • Operating cash flow of 160.24M provides exceptional 288.72x coverage of minority interest expenses 555000, showing strong core operations.
  • Operating cash flow of 160.24M provides exceptional 12.60x coverage of interest expenses 12.71M, showing strong debt service capability.
  • Strong tangible asset base of 1.83B provides 3.67x coverage of total debt 498.76M, indicating robust asset backing and low credit risk.
  • Cash position of 146.50M provides exceptional 263.97x coverage of minority interest expenses 555000, indicating strong liquidity.
  • Retained earnings of 2.08B provide full 5.82x coverage of long-term debt 357.60M, indicating strong internal capital position.

Bear case

  • Operating cash flow of 160.24M barely covers its investment activities of (110.64M), with a coverage ratio of -1.45, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 160.24M provides thin coverage of dividend payments of (30.01M) with a -5.34 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 146.50M provide limited coverage of acquisition spending of (19.60M), which is -7.48x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 149.02M show weak coverage of depreciation charges of 187.92M, with a 0.79 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 187.92M relative to operating cash flow of 160.24M, which is 1.17x suggests significant maintenance capital requirements affecting free cash flow.

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Integrated Freight & Logistics
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 FDX Fedex Corp 99.67 Bn 20.28 1.11 37.77 Bn
2 UPS United Parcel Service Inc 98.11 Bn 17.61 1.11 28.59 Bn
3 JBHT Hunt J B Transport Services Inc 28.29 Bn 145.14 7.91 1.60 Bn
4 EXPD Expeditors International Of Washington Inc 22.29 Bn 27.40 2.13 0.56 Bn
5 CHRW C. H. Robinson Worldwide, Inc. 21.34 Bn 36.35 1.31 1.43 Bn
6 ZTO ZTO Express (Cayman) Inc. 20.15 Bn 16.23 3.02 1.74 Bn
7 GXO GXO Logistics, Inc. 7.46 Bn 83.79 0.58 5.50 Bn
8 LSTR Landstar System Inc 5.11 Bn 28.60 1.06 0.13 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.99 1.04
EV to Cash from Ops. EV/CFO 63.86 -0.78
EV to Debt EV to Debt 5.75 -1.98
EV to EBIT EV/EBIT 39.37 10.54
EV to EBITDA EV/EBITDA 35.11 9.04
EV to Free Cash Flow [EV/FCF] EV/FCF 178.21 -2.76
EV to Market Cap EV to Market Cap 0.96 0.62
EV to Revenue EV/Rev 1.51 -0.31
Price to Book Value [P/B] P/B 7.70 4.96
Price to Earnings [P/E] P/E 65.88 15.82
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.50 0.95
Dividend Payout Ratio % Div Payout % (Qtr) 28.40 14.92
Dividend per Basic Share Div per Share (Qtr) 0.50 0.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 43.37 11.81
Interest Coverage Int. cover (Qtr) 11.72 -430.42
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -50.93 -2,938.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -21.29 139.78
Dividend Growth (1y) % Div 1y % (Qtr) 33.33 -0.23
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -4.93 -442.31
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -0.22 -224.47
EBIT Growth (1y) % EBIT 1y % (Qtr) 1.00 -367.92
EBT Growth (1y) % EBT 1y % (Qtr) 2.83 -191.62
EPS Growth (1y) % EPS 1y % (Qtr) -1.68 -974.30
FCF Growth (1y) % FCF 1y % (Qtr) -70.30 -67.17
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.01 1.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.29 1.29
Cash Payout Ratio Cash Payout (Qtr) 0.12 0.07
Cash Ratio Cash Ratio (Qtr) 0.27 0.97
Current Ratio Curr Ratio (Qtr) 1.47 3.22
Debt to Equity Ratio Debt/Equity (Qtr) 0.29 1.06
Interest Cover Ratio Int Coverage (Qtr) 11.72 -430.42
Times Interest Earned Times Interest Earned (Qtr) 11.72 -430.42
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 9.00 17.62
EBIT Margin % EBIT Margin % (Qtr) 4.00 24.68
EBT Margin % EBT Margin % (Qtr) 3.66 18.38
Gross Margin % Gross Margin % (Qtr) 27.00 20.25
Net Profit Margin % Net Margin % (Qtr) 2.80 31.04