Hub Group’s third quarter was marked by positive market reaction, as revenue outpaced analyst expectations despite a year-over-year decline. Management attributed the quarter’s performance to improving intermodal volumes, the addition of new services such as the Louisville integrated lane, and the Marten Transport Intermodal acquisition. CEO Phillip Yeager explained that peak season demand arrived later than anticipated, but momentum in September and October supported results. The company also highlighted cost control initiatives and productivity gains, particularly in its logistics and managed transportation businesses.
Is now the time to buy HUBG? Find out in our full research report (it’s free for active Edge members).
Hub Group (HUBG) Q3 CY2025 Highlights:
- Revenue: $934.5 million vs analyst estimates of $927.9 million (5.3% year-on-year decline, 0.7% beat)
- EPS (GAAP): $0.47 vs analyst expectations of $0.48 (2.1% miss)
- Adjusted EBITDA: $87.78 million vs analyst estimates of $81.54 million (9.4% margin, 7.7% beat)
- The company dropped its revenue guidance for the full year to $3.65 billion at the midpoint from $3.7 billion, a 1.4% decrease
- EPS (GAAP) guidance for the full year is $1.85 at the midpoint, beating analyst estimates by 1.8%
- Operating Margin: 4.2%, in line with the same quarter last year
- Sales Volumes were flat year on year (12% in the same quarter last year)
- Market Capitalization: $2.19 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Hub Group’s Q3 Earnings Call
- Scott Group (Wolfe Research) questioned the timeline for realizing benefits from the rail merger and bid season. CEO Phillip Yeager responded that most volume gains would be effective in the first half of next year, with implementation ramping through the second half.
- Bascome Majors (Susquehanna Financial Group) asked when share gains would translate to financial results. Yeager clarified that while bid season engagement is high, meaningful financial impact is expected in the second half as new contracts become effective.
- J. Bruce Chan (Stifel) probed the apparent contradiction between strong peak season commentary and tempered fourth-quarter guidance. CFO Kevin Beth explained guidance assumes typical seasonality, with upside if demand remains robust through year-end.
- Daniel Moore (Baird) asked about intermodal capacity and leverage for future M&A. Yeager stated current container utilization allows for 35% incremental growth without major capital outlays, and the company could raise leverage for targeted acquisitions.
- Elliot Alper (TD Cowen) inquired about delays in Final Mile onboarding and segment outlook. Yeager said onboarding was delayed due to customer caution but volumes are ramping as expected, with housing market recovery a potential catalyst.
Catalysts in Upcoming Quarters
In upcoming quarters, our analysts will monitor (1) the timeline and customer adoption of the new Louisville intermodal service tied to the potential rail merger, (2) continued ramp of Final Mile business awards and early-stage integration of recent acquisitions, and (3) progress in cost containment and automation across logistics segments. The pace at which the freight market stabilizes and Hub Group’s ability to maintain margin discipline will also be critical factors.
Hub Group currently trades at $35.68, in line with $35.44 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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