Last update on 2024-06-07

Hub Group (HUBG) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Discover the Piotroski F-Score analysis for Hub Group (HUBG) in 2023, revealing insights into profitability, liquidity, and operational efficiency.

Short Analysis - Piotroski Score: 4

We're running Hub Group (HUBG) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Hub Group (HUBG) has received a Piotroski F-Score of 4, which is considered below average and suggests that the company's financial health and performance could have some weaknesses. The score is based on the following criteria: 1. Profitability: Positive net income and positive cash flow from operations in 2023 are strengths, but the return on assets (ROA) has decreased. This indicates efficiency issues with asset use. 2. Liquidity: Although HUBG has had a positive operating cash flow higher than net income, indicating a solid ability to generate cash, both the leverage and current ratio have worsened. The leverage increase suggests more reliance on debt, and the declining current ratio points to potential difficulties in meeting short-term liabilities. 3. Operating Efficiency: While HUBG has reduced the number of shares outstanding, benefiting shareholders, both the gross margin and asset turnover ratio have decreased. This indicates potential inefficiencies and competitive challenges, particularly in comparison to the broader industry. In summary, HUBG shows some financial strengths but also significant challenges in asset efficiency, debt reliance, liquidity, and competitive positioning.

Insights for Value Investors Seeking Stable Income

Hub Group (HUBG) might not be the best choice for risk-averse investors given its Piotroski F-Score of 4, which indicates some potential weaknesses. However, investors who believe in the company's long-term prospects and are comfortable taking on some financial risk may still find it worth exploring further, especially if they believe the company can address and improve these issues. Further in-depth analysis and consideration of future growth prospects, competitive positioning, and market conditions would be advisable before making an investment decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Hub Group (HUBG)

Company has a positive net income?

Net income is a company's total profit, reflecting its financial health. Positive net income indicates profitability and efficient cost management.

Hub Group's net income for 2023 stands at $167,528,000, which is indeed positive. Over the last 20 years, the company has generally demonstrated a positive trend in net income, although some fluctuations are evident, such as a notable peak in 2022 at $356,948,000. Despite the decline in 2023 compared to 2022, the positive net income is a good indicator. Hence, Hub Group earns a point here, reflecting solid profitability.

Company has a positive cash flow?

Check if CFO 422158000 in 2023 is positive or negative and explain the importance.

For Hub Group (HUBG), the Cash Flow from Operations (CFO) in 2023 is $422,158,000, which is positive. According to the Piotroski Analysis, a positive CFO is a significant indicator of the company's ability to generate sufficient cash flow from its core business operations. CFO is paramount because it indicates the liquidity and financial flexibility of a company, which in turn aids in reinvestment opportunities, debt servicing, and distribution of dividends. A company consistently producing positive CFO is typically seen as financially robust.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) is a critical measure to consider as it reflects the efficiency with which a company's management is using its assets to generate earnings.

For the year 2023, Hub Group (HUBG) reported an ROA of 0.0583, a substantial decline from the ROA of 0.136 in 2022. This decline translates to a point of 0 in the Piotroski Analysis since the ROA did not increase. Analyzing the past 20 years of ROA data, it's evident that HUBG's ROA has fluctuated but generally lagged behind the industry median. This decreasing trend could be detrimental to investor confidence, especially when compared to an industry median ROA of 0.1817 in 2023. Stronger ROA figures could indicate better asset utilization and profitability, thus boosting investor sentiment. However, the current trajectory suggests inefficiencies in asset usage or external challenges restraining performance.

Operating Cashflow are higher than Netincome?

The analysis compares a company's operating cash flow with its net income. If operating cash flow exceeds net income, indicate strong cash-generating capabilities.

In 2023, Hub Group (HUBG) reported an operating cash flow of $422,158,000 compared to a net income of $167,528,000. The operating cash flow is more than double the net income, which is a positive signal. The trend can be observed over the last two decades, where operating cash flow has consistently been positive and is generally on an upward trajectory, outpacing net income in many years. This strong cash flow generation indicates good financial health and efficiency in core operations, garnering 1 point in the Piotroski F-Score.

Liquidity of Hub Group (HUBG)

Leverage is declining?

Change in Leverage evaluates the company's reliance on debt for its operations. Calculating leverage helps investors gauge the level of financial risk in the company's capital structure.

The Leverage for Hub Group has increased from 0.1136 in 2022 to 0.1445 in 2023, indicating higher financial risk. Over the last 20 years, Hub Group's leverage fluctuated significantly, hitting lows of 0 in multiple years and peaking at 0.172 in 2003. The latest increase suggests that the company is taking on more debt relative to its equity, a trend which merits cautious scrutiny, especially for risk-averse investors.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. A higher ratio indicates better liquidity.

Hub Group's Current Ratio decreased from 1.5275 in 2022 to 1.2902 in 2023, reflecting a decline in the company's liquidity. This decrease suggests a weakened ability to cover short-term obligations, especially considering the industry median current ratio was 1.1884 in 2023, marginally lower than Hub Group’s ratio. Lower liquidity can signal potential short-term financial stress; hence, this is viewed negatively, giving it a score of 0 in the Piotroski Score framework.

Number of shares not diluted?

Change in Shares Outstanding is a metric to understand the issuance or buyback activities of a company. A decrease usually boosts the value per share of the remaining shares.

The outstanding shares of Hub Group decreased from 66,418,000 in 2022 to 63,324,000 in 2023. This decrease in shares is a positive indicator, signaling that the company possibly engaged in share buybacks. Share buybacks are generally undertaken to return value to shareholders, as they reduce the number of shares available, potentially increasing the earnings per share (EPS). Given this data, Hub Group scores 1 point in this criterion. Historically, the trend peaked around 2020 with outstanding shares at around 66 million, followed by a reduction trend.

Operating of Hub Group (HUBG)

Cross Margin is growing?

The change in gross margin criterion assesses whether a company can generate higher earnings from its sales. It compares the current year's gross margin with the previous year's.

In 2023, the gross margin for Hub Group (HUBG) was 0.1198, whereas in 2022, it was 0.1425. This indicates a decrease in gross margin. Thus, for this criterion, Hub Group will not score a point. A declining gross margin suggests higher cost of goods sold or difficulty in sustaining pricing power, which may signal operational inefficiencies or increased pricing pressure. Historically, the gross margin for Hub Group has fluctuated, peaking at 0.1425 in 2019 and reaching as low as 0.1037 in 2014. This 2023 mark is not at its worst but is a marked decline from 2022. Comparatively, the industry median gross margin in 2023 was 0.1817, which indicates that Hub Group's performance significantly trailed the broader industry trend. This makes the situation even more concerning for stakeholders.

Asset Turnover Ratio is growing?

Asset Turnover is a measure of a company's efficiency in using its assets to generate sales. An increasing trend is favourable, indicating better utilization.

In 2023, Hub Group's Asset Turnover was 1.4628, which marks a decrease from the 2.0355 recorded in 2022. This downward trend suggests that the company's efficiency in using its assets to generate sales has diminished. Over the past two decades, after peaking at values as high as 3.7383 in 2011, the ratio has been generally declining. The consistent decrease indicates that the firm has faced challenges in maintaining its asset efficiency, especially in recent years. Consequently, for 2023, the Piotroski F-Score for this criterion remains at 0.