It's been a pretty great week for Hub Group, Inc. (NASDAQ:HUBG) shareholders, with its shares surging 13% to US$59.69 in the week since its latest full-year results. Hub Group reported in line with analyst predictions, delivering revenues of US$3.7b and statutory earnings per share of US$3.20, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the latest consensus from Hub Group's twelve analysts is for revenues of US$3.78b in 2020, which would reflect an okay 3.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 6.5% to US$3.43. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.71b and earnings per share (EPS) of US$3.36 in 2020. So the consensus seems to have become somewhat more optimistic on Hub Group's earnings potential following these results.
There's been no major changes to the consensus price target of US$60.00, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Hub Group at US$73.00 per share, while the most bearish prices it at US$42.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Hub Group shareholders.
In addition, we can look to Hub Group's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Analysts are definitely expecting Hub Group's growth to accelerate, with the forecast 3.1% growth ranking favourably alongside historical growth of 1.0% per annum over the past five years. Compare this with other companies in the same market, which are forecast to see a revenue decline of 6.2% next year. So it's clear that despite the acceleration in growth, Hub Group is expected to grow meaningfully slower than the market average.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Hub Group's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Hub Group analysts - going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Hub Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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