USA Truck, Inc. (USAK) and J.B. Hunt Transport Services, Inc. (JBHT) are renowned companies operating in the U.S. trucking freight industry. USAK operates through Trucking, offering medium-haul common and contract carrier and freight services; and USAT Logistics, providing freight brokerage, logistics, and intermodal rail services.
On the other hand, JBHT provides surface transportation, delivery, and logistic services and operates through Intermodal; Dedicated Contract Services; Integrated Capacity Solutions; Final Mile Services; and Truckload segments.
Resumption of industrial activities and easing travel restrictions have helped the trucking industry rebound strongly from its pandemic lows. Moreover, worsening supply chain disruptions due to the Russia-Ukraine war have increased demand for trucking services.
Although high energy prices and chassis shortage have been concerning trucking companies lately, automation of logistics operations and efficient freight tracking platforms should allow the industry to stay afloat amid the potential economic slowdown.
The global freight trucking market is expected to grow at a 3% CAGR to reach $4.03 trillion by 2026. Therefore, both USAK and JBHT should benefit.
While JBHT lost 5.9% over the past month, USAK surged 86.2%. USAK is a clear winner with 56.4% returns over the past nine months versus JBHT’s 18.7% loss. But which of the stocks is a better buy now? Let’s find out.
Recent Financial Results
For the fiscal 2022 first quarter ended March 31, 2022, USAK’s net sales increased 26.9% year-over-year to $201.06 million. The company’s adjusted income from operations came in at $19.01 million for the quarter, indicating a 198.4% rise from the prior-year period.
While its adjusted net income increased 247.9% year-over-year to $13.35 million, its adjusted EPS grew 244.2% to $1.48. The company had cash and restricted cash of $20.59 million as of March 31, 2022.
For its fiscal 2022 first quarter ended March 31, 2022, JBHT’s total operating revenues increased 33.3% year-over-year to $3.49 billion. The company’s operating income came in at $334.29 million, up 61% from the year-ago period.
Its net earnings came in at $243.33 million, representing a 66% rise from the prior-year period. Its EPS came in at $2.29, indicating a 67.2% year-over-year improvement. As of March 31, 2022, the company had $144.53 million in cash and cash equivalents.
Past and Expected Financial Performance
Over the past three years, USAK’s EBIT, net income, and EPS have increased at CAGRs of 29%, 39.4%, and 35.6%, respectively.
Analysts expect USAK’s EPS to rise 54.2% in fiscal 2022, ending December 31, 2022. The company’s revenue is expected to grow 17.8% year-over-year in fiscal 2022. Its EPS is expected to grow at 27.6% per annum over the next five years.
Over the past three years, JBHT’s EBIT, net income, and EPS have increased at CAGRs of 19.9%, 20.4%, and 21.9%, respectively.
JBHT’s EPS is expected to increase 31.5% year-over-year in fiscal 2022, ending December 31, 2022. The company’s revenue is expected to grow 18.6% year-over-year in fiscal 2022. Its EPS is expected to grow at a 19.8% rate per annum over the next five years.
Valuation
In terms of forward EV/Sales, JBHT is currently trading at 1.25x, 140.4% higher than USAK’s 0.52x. In terms of non-GAAP forward P/E, USAK’s 6.83x compares with JBHT’s 17.72x.
Profitability
JBHT’s trailing-12-month revenue is 17.3 times that of USAK’s. Also, JBHT is more profitable, with a 16.6% gross profit margin versus USAK’s 16.3%.
Furthermore, JBHT’s EBITDA margin and net income margin of 13.4% and 6.6% compare with USAK’s 10.3% and 4.6%, respectively.
POWR Ratings
While USAK has an overall A grade, which translates to Strong Buy in our proprietary POWR Ratings system, JBHT has an overall C grade, equating to Neutral. The POWR Ratings are calculated by considering 118 distinct factors, each weighted to an optimal degree.
USAK has been graded an A in terms of Growth, which is in sync with its higher-than-industry growth rates over the past year. USAK’s EPS has grown 214.1% over the past year, 510.5% above the industry average of 35.1%. JBHT’s B grade for Growth reflects its relatively lower growth rates.
USAK has a B grade for Value, in sync with its lower-than-industry valuation ratios. USAK’s 6.83x non-GAAP forward P/E is 55.2% lower than the 15.25x industry average. JBHT’s C grade for Value is in sync with its higher-than-industry valuation ratios. JBHT’s 17.72x non-GAAP forward P/E is 16.2% higher than the 15.25x industry average.
Of the 22 stocks in the A-rated Trucking Freight industry, USAK is ranked #2, while JBHT is ranked #13.
Beyond what we have stated above, our POWR Ratings system has graded USAK and JBHT for Stability, Quality, Sentiment, and Momentum. Get all USAK ratings here. Also, click here to see the additional POWR Ratings for JBHT.
The Winner
As the trucking industry plays a critical link in the supply chain, high demand for freight trucking services should benefit USAK and JBHT. However, relatively lower valuation and impressive growth prospects make USAK a better buy here.
Our research shows that the odds of success increase if one invests in stocks with an Overall POWR Rating of Buy or Strong Buy. Click here to access the top-rated stocks in the Trucking Freight industry.
USAK shares were trading at $31.30 per share on Friday morning, up $0.21 (+0.68%). Year-to-date, USAK has gained 57.44%, versus a -17.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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