J.B. Hunt vs. C.H. Robinson: Which Trucking Stock is a Better Buy?

J.B. Hunt Transport Services, Inc. (JBHT) in Lowell, Ark., and C.H. Robinson Worldwide, Inc. (CHRW), which is headquartered in  Eden Prairie, Minn., are two prominent players in the trucking freight industry. JBHT is a surface transportation, delivery, and logistics company that operates through the following segments: Intermodal; Dedicated Contract Services; Integrated Capacity Solutions; Final Mile Services; and Truckload. It transports automotive parts, department store merchandise, paper, and wood products, food and beverages, plastics, chemicals, and manufacturing materials and supplies. CHRW provides freight transportation services, customs broker services, logistics solutions, and related services to companies in various industries worldwide. In addition, the company buys, sells, and markets fresh produce, including fresh fruits, vegetables, and other perishable items.

The resumption of industrial activities and easing of travel restrictions have helped the trucking industry rebound strongly from its pandemic lows this year. With rising consumer demand as the holiday season approaches, the heightened need for the surface transportation of raw materials should benefit the industry. Furthermore, amid ongoing supply chain constraints worldwide, trucking companies' intermodal services and logistics solutions should be in high demand. The global general freight trucking market is expected to grow at an 8% CAGR to $997.35 billion by 2028. So, both JBHT and CHRW should benefit.

While CHRW has gained 4.6% in price year-to-date, JBHT has surged 44.9%. JBHT is a clear winner with 17.2% gains versus CHRW’s 4.8% returns in terms of their past six months’ performance. But which of these stocks is a better pick now? Let’s find out.

Latest Developments

On October 27, 2021, JBHT’s industry-leading technology solution, J.B. Hunt 360°, integrated within the SAP ERP application to create a one-stop source for managing logistics needs. This integration will enable businesses using SAP solutions to instantly access J.B. Hunt 360’s freight-matching marketplace to secure capacity for shipments, load documentation, and invoices and automate many time-consuming manual tasks. The company is looking forward to witnessing great demand for this solution in the coming months.

On May 12, 2021, CHRW acquired Combinex Holding B.V., a freight forwarding company specialized in transporting dry, fresh, and frozen goods, and expanded its European road transportation presence. Combinex’s offering of additional haul capabilities with a dedicated fleet should enable CHRW to gain traction in the short-medium haul market and provide better and more efficient services to its customers.

Recent Financial Results

JBHT’s total operating revenues for its fiscal third quarter, ended September 30, 2021, increased 27.2% year-over-year to $3.14 billion. The company’s operating income came in at $273.83 million, up 56% from the prior-year period. While its net earnings increased 59.2% year-over-year to $199.83 million, its EPS increased 59.3% to $1.88. As of September 30, 2021, the company had $529.60 million in cash and cash equivalents.

For the fiscal third quarter ended September 30, 2021, CHRW’s total revenues increased 48.3% year-over-year to $6.26 billion. The company’s adjusted gross profit came in at $844.19 million, representing a 43.3% rise from the prior-year period. Its income from operations came in at $310.77 million, up 84.7% from the prior-year period. CHRW’s net income was $247.05 million, indicating an 81% rise from the year-ago period. Its EPS increased 85% year-over-year to $1.85. The company had $202.65 million in cash and cash equivalents as of September 30, 2021.

Past and Expected Financial Performance

JBHT’s revenue and EBITDA have grown at CAGRs of 11.2% and 9.8%, respectively, over the past three years. Analysts expect JBHT’s EPS to increase 44.5% year-over-year in the current year and 19.6% next year. Its revenue is expected to increase 23.9% year-over-year in the current year and 10.5% next year. The company’s EPS is expected to grow at a 20.5% rate per annum over the next five years.

In comparison, CHRW’s revenue and EBITDA have increased at CAGRs of 8.7% and 4.1%, respectively, over the past three years. CHRW’s EPS is expected to rise 68% year-over-year in the current year and decline 4.5% next year. Its revenue is expected to rise 39.2% year-over-year in the current year and decline marginally next year. The stock’s EPS is expected to grow at a 12.7% rate per annum over the next five years.

Valuation

In terms of non-GAAP forward PEG, JBHT is currently trading at 1.93x, which is 78.7% higher than CHRW’s 1.08x. In terms of forward EV/Sales, JBHT’s 1.78x compares with CHRW’s 0.65x.

Profitability

CHRW’s trailing-12-month revenue is almost 1.9 times higher than what JBHT generates. However, JBHT is more profitable, with a 13.1% EBITDA margin versus CHRW’s 5.1%.

Also, JBHT’s 5.9% and 2.5% respective net income and levered free cash flow margins compare favorably with CHRW’s 3.6% and 0.1%.

POWR Ratings

While JBHT has an overall B grade, which translates to Buy in our proprietary POWR Ratings system, CHRW has an overall C grade, equating to Neutral. The POWR Ratings are calculated by considering 118 distinct factors, each weighted to an optimal degree.

JBHT has a B grade for Momentum, which is in sync with its impressive price gains over the past year. JBHT has gained 44.9% in price year-to-date. CHRW’s C grade for Momentum reflects its mixed price performance over the past year. CHRW has gained 4.6% year-to-date.

JBHT has a B grade for Sentiment, which is consistent with favorable analyst estimates. Analysts expect JBHT’s EPS to grow 19.6% year-over-year in the current year to $8.19. However, CHRW’s C grade for Sentiment is in sync with lower analysts’ expectations. CHRW’s EPS is expected to decline 4.5% year-over-year to $5.97 in the current year.

Of the 22 stocks in the A-rated Trucking Freight industry, CHRW is ranked #19, while JBHT is ranked #9.

Beyond what we’ve stated above, our POWR Ratings system has also rated JBHT and CHRW for Growth, Stability, Value, and Sentiment. Get all CHRW ratings here. Also, click here to see the additional POWR Ratings for JBHT. 

The Winner

The heightened need for freight transportation amid ongoing supply chain challenges benefits companies in the trucking industry. So, both JBHT and CHRW should benefit. However, its higher profitability and better analyst sentiment we think make JBHT a better buy here.

Our research shows that the odds of success increase if one bets on stocks with an Overall POWR Rating of Buy or Strong Buy. Click here to access the top-rated stocks in the Trucking Freight industry.

JBHT shares were trading at $197.19 per share on Friday afternoon, down $0.82 (-0.41%). Year-to-date, JBHT has gained 45.10%, versus a 24.04% rise in the benchmark S&P 500 index during the same period.

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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