Why J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) Could Be Worth Watching
Let's talk about the popular J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on J.B. Hunt Transport Services’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for J.B. Hunt Transport Services
What's the opportunity in J.B. Hunt Transport Services?
J.B. Hunt Transport Services appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that J.B. Hunt Transport Services’s ratio of 31.86x is above its peer average of 26.67x, which suggests the stock is trading at a higher price compared to the Transportation industry. But, is there another opportunity to buy low in the future? Since J.B. Hunt Transport Services’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of J.B. Hunt Transport Services look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 61% over the next couple of years, the future seems bright for J.B. Hunt Transport Services. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in JBHT’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe JBHT should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on JBHT for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for JBHT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about J.B. Hunt Transport Services as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 2 warning signs with J.B. Hunt Transport Services, and understanding them should be part of your investment process.
If you are no longer interested in J.B. Hunt Transport Services, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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