Hub Group, Inc. (HUBG): A Bear Case Theory

We came crossed a bearish thesis connected Hub Group, Inc. connected Quality Value Investing’s Substack by David J. Waldron. In this article, we volition summarize the bulls’ thesis connected HUBG. Hub Group, Inc.'s stock was trading astatine $39.43 arsenic of December 1st. HUBG’s trailing and guardant P/E were 22.17 and 18.02 respectively according to Yahoo Finance.

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Hub Group, Inc. (NASDAQ: HUBG), a small-cap subordinate successful the intermodal freight and logistics industry, provides an extended scope of proscription and logistics services crossed North America, including intermodal, truckload, LTL, dedicated, and planetary transport, arsenic good arsenic warehousing and fulfillment solutions. Added to QVI Real-Time Stock Picks successful May 2023 astatine a outgo ground of $37.13, the institution remains the second-largest intermodal selling institution successful the industry, down JB Hunt, and holds a constrictive moat according to Morningstar.

Despite a beardown marketplace presumption and diversified work offering, Hub Group’s fiscal show has underwhelmed comparative to benchmarks. Its trailing five-year annualized gross maturation was successful the debased azygous digits—well beneath the S&P 500’s +16%—while the astir caller twelve-month gross fell 5.4% versus the market’s +18.8%. Profitability has besides lagged, with debased gross margins translating into humble nett net margins, acold beneath the S&P 500 median of +23.2%.

Return connected equity and instrumentality connected invested superior person some fallen abbreviated of QVI’s thresholds and adjacent medians, with ROIC failing to transcend the company’s outgo of capital, signaling inefficiencies successful superior deployment. Although a $250 cardinal stock repurchase programme was announced successful precocious 2023, lone a tiny fraction has been executed, limiting its interaction connected shareholder returns.

Furthermore, owners’ earnings—defined arsenic EPS and dividend maturation or, alternatively, escaped currency travel growth—have remained stuck successful the debased azygous digits implicit the past 5 years. Given these anemic fundamentals, QVI maintains a bearish standing connected Hub Group.

Previously we covered a bullish thesis connected Old Dominion Freight Line, Inc. (ODFL) by Richard Toad successful October 2024, which highlighted its pricing powerfulness and beardown ROIC successful the LTL market. The banal has depreciated astir by 28.80% since our sum arsenic the thesis has not yet played out. The thesis inactive stands. David J. Waldron shares a contrarian and cautious presumption done his Hub Group coverage.

Hub Group, Inc. is not on our database of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge money portfolios held HUBG at the extremity of the second quarter which was 22 in the erstwhile quarter. While we admit the imaginable of HUBG as an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.