At US$173, Is J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) Worth Looking At Closely?

By
Simply Wall St
Published
April 11, 2022
NasdaqGS:JBHT
Source: Shutterstock

Let's talk about the popular J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). The company's shares received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$218 at one point, and dropping to the lows of US$171. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether J.B. Hunt Transport Services' current trading price of US$173 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at J.B. Hunt Transport Services’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for J.B. Hunt Transport Services

Is J.B. Hunt Transport Services still cheap?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. 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 23.87x is above its peer average of 12.9x, 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? Given that J.B. Hunt Transport Services’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from J.B. Hunt Transport Services?

earnings-and-revenue-growth
NasdaqGS:JBHT Earnings and Revenue Growth April 11th 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 9.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for J.B. Hunt Transport Services, at least in the short term.

What this means for you:

Are you a shareholder? JBHT’s future growth appears to have been factored into the current share price, 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 positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing J.B. Hunt Transport Services at this point in time. You'd be interested to know, that we found 2 warning signs for J.B. Hunt Transport Services and you'll want to know about them.

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.

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