Examining Hub Group Inc’s (NASDAQ:HUBG) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess HUBG’s latest performance announced on 30 June 2018 and compare these figures to its longer term trend and industry movements.
How Well Did HUBG Perform?
HUBG’s trailing twelve-month earnings (from 30 June 2018) of US$153.5m has more than doubled from US$74.8m in the prior year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.6%, indicating the rate at which HUBG is growing has accelerated. What’s enabled this growth? Let’s see if it is only owing to industry tailwinds, or if Hub Group has experienced some company-specific growth.
In the last couple of years, Hub Group grew its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US logistics industry has been growing its average earnings by double-digit 48.7% over the prior year, and a more subdued 5.4% over the past five years. This growth is a median of profitable companies of 17 Logistics companies in US including Janel, Radiant Logistics and bpost. This means any uplift the industry is deriving benefit from, Hub Group is able to amplify this to its advantage.
In terms of returns from investment, Hub Group has fallen short of achieving a 20% return on equity (ROE), recording 18.9% instead. However, its return on assets (ROA) of 9.4% exceeds the US Logistics industry of 8.0%, indicating Hub Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Hub Group’s debt level, has declined over the past 3 years from 11.3% to 9.2%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 5.8% to 33.9% over the past 5 years.
What does this mean?
Though Hub Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Hub Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Hub Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HUBG’s future growth? Take a look at our free research report of analyst consensus for HUBG’s outlook.
- Financial Health: Are HUBG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.