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Looking for a Growth Stock? 3 Reasons Why JB Hunt (JBHT) is a Solid Choice

·3 min read

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.

In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.

However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.

Our proprietary system currently recommends JB Hunt (JBHT) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.

Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Here are three of the most important factors that make the stock of this trucking and logistics company a great growth pick right now.

Earnings Growth

Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for JB Hunt is 13.2%, investors should actually focus on the projected growth. The company's EPS is expected to grow 33.9% this year, crushing the industry average, which calls for EPS growth of 28.7%.

Impressive Asset Utilization Ratio

Asset utilization ratio -- also known as sales-to-total-assets (S/TA) ratio -- is often overlooked by investors, but it is an important indicator in growth investing. This metric exhibits how efficiently a firm is utilizing its assets to generate sales.

Right now, JB Hunt has an S/TA ratio of 2.02, which means that the company gets $2.02 in sales for each dollar in assets. Comparing this to the industry average of 1.48, it can be said that the company is more efficient.

In addition to efficiency in generating sales, sales growth plays an important role. And JB Hunt looks attractive from a sales growth perspective as well. The company's sales are expected to grow 22.1% this year versus the industry average of 16.6%.

Promising Earnings Estimate Revisions

Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The current-year earnings estimates for JB Hunt have been revising upward. The Zacks Consensus Estimate for the current year has surged 2.9% over the past month.

Bottom Line

While the overall earnings estimate revisions have made JB Hunt a Zacks Rank #2 stock, it has earned itself a Growth Score of A based on a number of factors, including the ones discussed above.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination positions JB Hunt well for outperformance, so growth investors may want to bet on it.


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J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
 
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