This transportation management company beat analysts’ estimates by eight cents last quarter. In the past 30 days, two analysts have increased their earnings forecasts.
Hub Group (HUBG)
From Upside
Hub Group (HUBG) leverages its expansive network to move freight in and out of every major city in the U.S., Canada, and Mexico. The company, which provides intermodal (rail and truck shipping) and logistics services, utilizes an “asset-light” strategy to minimize investments in equipment and facilities.
In 2015, 62% of sales came from the intermodal business, which relies heavily on railroad shipments. To broaden its revenue stream, Hub plans to grow its truck-brokerage and logistics units.
The stock earns an impressive Quadrix® Overall score of 97, driven by strong ranks for Quality (86) and Earnings Estimates (92). For 2016, the consensus projects per-share profits will rise 10% to $2.21 per share on 3% revenue growth. Last month, management authorized a $100 million share-repurchase program, enough to buy about 7.5% of outstanding shares at current prices.
To augment growth and expand services, Hub is considering spending up to $1 billion on acquisitions over the next five years.
Hub is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, March 2016