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

Looking at J.B. Hunt Transport Services, Inc.’s (NASDAQ:JBHT) fundamentals some investors are wondering if its last closing price of $89.26 represents a good value for money for this high growth stock. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors.

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

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

What are the future expectations?

Analysts are predicting good growth prospects for J.B. Hunt Transport Services over the next couple of years. The consensus forecast from 20 analysts is certainly positive with earnings per share estimated to rise from today’s level of $4.5 to $7.041 over the next three years. On average, this leads to a growth rate of 10% each year, which indicates a solid future in the near term.

Can JBHT’s share price be justified by its earnings growth?

J.B. Hunt Transport Services is available at price-to-earnings ratio of 19.84x, showing us it is overvalued based on current earnings compared to the Transportation industry average of 16.97x , and overvalued compared to the US market average ratio of 17.41x .

NasdaqGS:JBHT Price Estimation Relative to Market, May 27th 2019
NasdaqGS:JBHT Price Estimation Relative to Market, May 27th 2019

We understand JBHT seems to be overvalued based on its current earnings, compared to its industry peers. However, since J.B. Hunt Transport Services is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 19.84x and expected year-on-year earnings growth of 10% give J.B. Hunt Transport Services a higher PEG ratio of 1.89x. This means that, when we account for J.B. Hunt Transport Services’s growth, the stock can be viewed as a bit overvalued , based on its fundamentals.

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.