QUOTE AND NEWS
SeekingAlpha  Sep 30  Comment 
By James Sands: OVERVIEW For those not familiar with The Hub Group Inc. (NASDAQ:HUBG) business, the company operates as an asset-light entity and provides three services including intermodal, truck brokerage, and logistics and other services....
Benzinga  Sep 19  Comment 
Below are the top small-cap air delivery & freight services stocks on the NYSE and the NASDAQ in terms of return on equity. The trailing-twelve-month return on equity at Radiant Logistics (NYSE: RLGT) is 21.90%. Radiant Logistics' PEG ratio is...
TheStreet.com  Sep 10  Comment 
NEW YORK (TheStreet) -- Shares of Hub Group Inc aare tanking 7.50% to $40.06 after the trucking company was downgraded to "market perform" from "strong buy" at Raymond James this morning, following its outlook update in an 8-K filing regarding...
StreetInsider.com  Sep 10  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/HUB+Group%2C+Inc.+%28HUBG%29+Downgraded+Following+Updated+Outloook/9820805.html for the full story.
SeekingAlpha  Jul 18  Comment 
Hub Group, Inc. (NASDAQ:HUBG) Q2 2014 Earnings Conference Call July 17, 2014 5:00 PM ET Executives Dave Yeager - CEO Mark Yeager - President and COO Terri Pizzuto - EVP and CFO Analysts John Barnes - RBC Capital Markets ...
Benzinga  May 13  Comment 
Hub Group (NASDAQ: HUBG) shares gained 3.55% to reach a new 52-week high of $46.99 after KeyBanc upgraded the stock from Hold to Buy. SanDisk (NASDAQ: SNDK) shares touched a new 52-week high of $91.50. SanDisk's PEG ratio is 0.80. Foot...
TheStreet.com  May 13  Comment 
Update (9:42 a.m.): Updated with Tuesday market open information. NEW YORK (TheStreet) -- Keybanc upgraded Hub Group  to "buy" from "hold" and set a $53 price target. The firm believes the company can deliver earnings upside in the coming...
Benzinga  Apr 21  Comment 
Weibo (NASDAQ: WB) shares moved up 15.61% to $23.40. The volume of Weibo shares traded was 5469% higher than normal. Weibo closed its first day of trading at $20.17, an 18 percent gain for IPO investors. Sarepta Therapeutics (NASDAQ: SRPT)...
SeekingAlpha  Apr 18  Comment 
Hub Group, Inc. (HUBG) Q1 2014 Results Earnings Conference Call April 17, 2014, 05:00 PM ET Executives David Yeager - Chairman and CEO Mark Yeager - Vice Chairman, President and COO Terri Pizzuto - EVP and CFO Analysts ...
SeekingAlpha  Apr 17  Comment 
Complete Story »




 
TOP CONTRIBUTORS

Hub Group (NASDAQ:HUBG) is a transportation company that ships goods such as consumer products, automotive parts and retail merchandise. HUBG does not control its own transportation assets (i.e. trucks, railcars, planes) but contracts with third-party carriers like Burlington Northern and Union Pacific (UNP) to move goods. Hub Group buys container-hauling space in bulk from these carriers, and then sells the space to clients at rates cheaper than what they could negotiate independently.[1] The company’s core business intermodal transportation (when goods are shipped using a combination of transportation modes, usually rail and truck), which account for nearly three-quarters of total revenues. The remainder of HUBG’s earnings comes from its truck brokerage (roughly 20%) and logistics (roughly 10%) segments.[2] Operating 21 facilities throughout the U.S. and Canada, Hub Group has become the largest intermodal marketing company in the country and one of the top five truck brokers. Because of its size, HUBG has been able to establish close ties with major railroad suppliers and obtain favorable rates for the use of third-party services. The company earned $1.5 billion in revenue and $34 million in net income in 2009.[3]

Intermodal shipping is generally cheaper (although also slower and less flexible) than trucking alone because railroads are about three times more fuel-efficient than long-haul trucks.[4] In the short term, rising fuel prices lead to greater demand for HUBG's intermodal services. Ironically, these same fuel prices present a challenge for the company's truck brokerage division which is already suffering from an ongoing industry wide shortage of truckers.

Company Overview

Business Segments[5]

Hub Group has three business segments:

Intermodal Segment (70% of revenue)

This division ships customer cargo using a combination of rail and truck transport, typically over long distances of 750 miles or more. HUBG contracts with railroads to provide transportation for the long-haul portion of the shipment and with local trucking companies (known as “drayage companies”) for pickup and delivery. Hub Group controls one of the largest container fleets in the industry, with 23,000 leased or rented containers. The firm’s size helps HUBG maintain strong relationships with all of the major railroad suppliers, including Burlington Northern Santa Fe (BNI), Union Pacific (UNP), CSX, Norfolk Southern (NSC) and Canadian National. Through its subsidiaries, Comtrak and Quality Services, HUBG also provides its own drayage services for intermodal clients.

Truck Brokerage Segment (20% of revenue)

Hub Group’s truck brokerage unit contracts with independent trucking companies to negotiate rates, track shipments in transit and handle claims for freight loss and damage on behalf of its customers.

Logistics Segment (10% of revenue)

HUBG’s logistics division operates under the name of Unyson Logistics. Unyson offers such services as shipment optimization, load consolidation and carrier management.

Business Growth

FY 2009 (ended December 31, 2009)[3]

  • Net revenue fell 19% to $1.5 billion. Revenue from the company's intermodal and brokerage segments fell by 20.7% and 21.3% respectively. This was offset by a 2.7% increase in revenue from the logistics segment.
  • Net income fell 42% to $34 million.

Trends and Forces

Hub Group’s Business is Susceptible to Economic Conditions

As a shipper of consumer products, retail merchandise and automotive parts among other things, HUBG relies on a healthy economy to keep goods moving about the country. By contracting with third-party carriers instead of buying its own transportation fleet, Hub Group is able to save money and adjust shipping capacity by controlling the number of third-party contracts that it enters. This shields it in part from fluctuations in consumer demand. However, a slowing economy and low consumer demand will cause a total volume drop in shipments that can hurt HUBG’s earnings.

HUBG’s Intermodal Operations Offer Hedge Against Increasing Fuel Prices

HUBG is relatively shielded from changes in fuel prices because the majority of its business comes from its intermodal operations, which are more fuel-efficient than trucking alone. In addition, like most of its competitors in the transportation industry, HUBG determines shipping rates by charging a base rate plus or minus a change in diesel prices. However, this fuel surcharge is not always fully and immediately transferable to the customer. And if diesel prices continue to increase, it may be harder for transportation companies to continue this practice.

HUBG Relies on Third-Party Carriers for its Business

As a non-asset based transportation firm, Hub Group has to secure third-party services for its business, and secure them at a favorable cost. Because it has developed networks of sufficient size and maintained close relationships with the major railroads, HUBG has so far been able to obtain profitable rates from its suppliers. A disruption of these relationships or a decline in the volume of shipments will jeopardize HUBG’s ability to secure third-party carriers at an advantageous cost.

Hub Group is Subject to Government Trade Policy and Regulation

The transportation industry is subject to a number of state and federal rules on issues such as insurance requirements, environmental standards, safety requirements, etc. Although the intermodal segment has essentially been deregulated, HUBG’s trucking operations are regulated by the U.S. Department of Transportation (DOT). In 2004, the DOT reduced the amount of time that drivers can spend behind the wheel[6]. In addition, the Environmental Protection Agency has posted guidelines for a progressive decrease in diesel truck emissions through 2010[7]. These regulations increase the operating costs of the trucking companies HUBG contracts with.

HUBG Faces Labor Supply Risks in the Trucking Industry

The driver market is the tightest it has been in 20 years, with turnover rate exceeding 100% in some large trucking companies. According to the American Trucking Association, the long-haul segment of the trucking industry faces a national shortage of roughly 20,000 drivers. This shortage will increase trucking company costs as they struggle to attract and retain drivers, an expense that will be passed on to HUBG.

Competition

Hub Group’s intermodal division competes chiefly with railroads and other intermodal service providers. Peer competitors in this category include Union Pacific (UNP), CSX Intermodal, J.B. Hunt Transport Services (JBHT), and Pacer International (PACR).

The firm’s truck brokerage unit competes primarily against asset-based transportation firms like Conway Inc (CNW) and YRC Worldwide (YRCW), and non-asset based transportation firms like C.H. Robinson Worldwide (CHRW).

References

  1. HUBG 2009 10-K "General" pg. 2
  2. 3.0 3.1 HUBG 2009 10-K "Selected Financial Data" pg. 14
  3. HUBG 2009 10-K "Relationship with Railroads" pg. 4
  4. HUBG 2009 10-K "Services Provided" pg. 2-3
  5. [U.S. Department of Labor: Truck Drivers and Driver/Sales Workers]
  6. [DieselNet: Emissions Standards]
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