The first-quarter results for Hub Group, Inc. (NASDAQ:HUBG) were released last week, making it a good time to revisit its performance. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$999m, statutory earnings beat expectations by a notable 11%, coming in at US$0.44 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Hub Group after the latest results.
Following the latest results, Hub Group's twelve analysts are now forecasting revenues of US$4.49b in 2024. This would be a solid 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 3.6% to US$2.05 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$4.58b and earnings per share (EPS) of US$2.15 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$45.20 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Hub Group at US$50.00 per share, while the most bearish prices it at US$40.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Hub Group's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.1% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hub Group to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hub Group. They also downgraded Hub Group's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Hub Group going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Hub Group that you should be aware of.
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