Is J.B. Hunt Transport Services, Inc.’s (NASDAQ:JBHT) Growth Strong Enough To Justify Its February Share Price?

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J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is considered a high growth stock. However its last closing price of $113.81 left investors wondering whether this growth has already been factored into the share price. Below I will be talking through a basic metric which will help answer this question.

Check out our latest analysis for J.B. Hunt Transport Services

What are the future expectations?

Investors in J.B. Hunt Transport Services have been patiently waiting for the uptick in earnings. If you believe the analysts covering the stock then the following year will be very interesting. The consensus forecast from 21 analysts is bullish with earnings per share estimated to rise from today’s level of $4.434 to $7.74 over the next three years. This indicates an estimated earnings growth rate of 11% per year, on average, which indicates a solid future in the near term.

Is JBHT’s share price justified by its earnings growth?

J.B. Hunt Transport Services is available at price-to-earnings ratio of 25.67x, showing us it is overvalued based on current earnings compared to the Transportation industry average of 17.79x , and overvalued compared to the US market average ratio of 17.39x .

NasdaqGS:JBHT Price Estimation Relative to Market, February 20th 2019
NasdaqGS:JBHT Price Estimation Relative to Market, February 20th 2019

We already know that JBHT appears to be overvalued when compared to its industry average. But, seeing as J.B. Hunt Transport Services is perceived as a high-growth stock, we must also account for its earnings growth, which is captured in the PEG ratio. A PE ratio of 25.67x and expected year-on-year earnings growth of 11% give J.B. Hunt Transport Services a quite high PEG ratio of 2.26x. So, when we include the growth factor in our analysis, J.B. Hunt Transport Services appears overvalued , based on fundamental analysis.

What this means for you:

JBHT’s current overvaluation could signal a potential selling opportunity to reduce your exposure to the stock, or it you’re a potential investor, now may not be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:

  1. Financial Health: Are JBHT’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.
  2. Past Track Record: Has JBHT been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of JBHT’s historicals for more clarity.
  3. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.