Recently, JB Hunt Transport Services Inc (JBHT, Financial) experienced a daily loss of 2.77%, contributing to a 22% decline over the past three months. With an Earnings Per Share (EPS) of 6.3, investors may wonder if the stock is fairly valued. This article dives into the intrinsic valuation of JBHT, guided by the proprietary GF Value, to determine if the current market price reflects the true worth of the company.
Company Overview
JB Hunt Transport Services, a leading entity in North America's surface transportation sector, operates through various segments including intermodal delivery, dedicated trucking services, for-hire truckload, heavy goods final-mile delivery, and asset-light truck brokerage. The company's stock is currently trading at $164.8 per share with a market capitalization of $17 billion, closely aligning with the GF Value of $176.72, suggesting a fair valuation. This introduction sets the stage for an in-depth analysis of JBHT's financial health and market position.
Understanding GF Value
The GF Value is a calculated metric that aims to determine the true value of a stock based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. For JBHT, the GF Value suggests the stock is fairly priced. This assessment is crucial as it indicates that the stock price should, over time, converge towards this value, assuming market conditions remain stable.
Financial Strength and Stability
Before investing, assessing the financial strength of a company is essential. JB Hunt Transport Services has a cash-to-debt ratio of 0.05, which is lower than the industry average. Despite this, the company maintains a fair financial strength rating of 7 out of 10, indicating a stable financial position.
Profitability and Growth Prospects
JB Hunt has consistently demonstrated strong profitability with a 10-year track record of earnings. The company's operating margin stands at 7.26%, reflecting robust financial health. Moreover, JBHT's 3-year average annual revenue growth rate of 10.8% signifies a promising growth trajectory, enhancing its appeal to potential investors.
Comparative Analysis: ROIC vs. WACC
Comparing the Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC) provides insights into value creation. JBHT's ROIC of 10.58 versus a WACC of 11.48 suggests that the company is just below the threshold of generating investor value, warranting careful consideration from potential investors.
Conclusion
In conclusion, JB Hunt Transport Services (JBHT, Financial) appears to be fairly valued at its current market price, reflecting its financial stability and growth potential. Investors looking for detailed financial metrics can explore JBHT's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
