Is J B Hunt Transport Services Inc (JBHT) A Good Buy?

J.B. Hunt Transport Services is not cheap. The stock trades at a forward PE of 20.02 versus the S&P 500’s forward PE of 18 and Landstar System’s forward PE of 17.76. J.B. Hunt Transport Services’ EV/EBITDA of 11 is also higher than Landstar System’s 10.59. Although it isn’t cheap, J.B. Hunt Transport Services deserves its premium, as it is the industry leader with strong growth prospects.  J. B. Hunt Transport Services management has done a great job executing. The company makes very effective use of its capital, with a return on equity of 39.5% and a return on asset of 14.3%.

On July 17, J. B. Hunt reported Q2 profits that slightly missed analyst expectations. Lower crude prices hurt the company, as lower crude prices meant a lower fuel surcharge that lowered revenues and EPS. Intermodal demand was also slightly lower than expected.

While the changing fuel surcharge and future federal regulations that might limit skilled labor will present challenges, J B Hunt Transport Services Inc (NASDAQ:JBHT)’s future will be profitable as long as the U.S. economy continues to grow. If EPS can grow by 14.8% a year for the next three years, J. B. Hunt Transport Services will earn in $5.48 per share in 2018. Assume a price to earnings multiple of 20 and JB Hunt Transport services stock will be $109.6 per share in three years.

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