XPO Logistics (XPO) & Hub Group (NASDAQ:HUBG) Critical Contrast

Hub Group (NASDAQ: HUBG) and XPO Logistics (NYSE:XPO) are both transportation companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Profitability

This table compares Hub Group and XPO Logistics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hub Group 3.35% 9.36% 4.27%
XPO Logistics 2.11% 7.29% 2.08%

Analyst Recommendations

This is a summary of current ratings for Hub Group and XPO Logistics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hub Group 1 8 3 0 2.17
XPO Logistics 0 1 17 0 2.94

Hub Group currently has a consensus target price of $47.55, suggesting a potential upside of 5.77%. XPO Logistics has a consensus target price of $95.65, suggesting a potential upside of 0.07%. Given Hub Group’s higher possible upside, equities research analysts clearly believe Hub Group is more favorable than XPO Logistics.

Institutional and Insider Ownership

90.2% of Hub Group shares are held by institutional investors. 5.4% of Hub Group shares are held by company insiders. Comparatively, 15.8% of XPO Logistics shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Hub Group has a beta of 1.4, suggesting that its stock price is 40% more volatile than the S&P 500. Comparatively, XPO Logistics has a beta of 2.55, suggesting that its stock price is 155% more volatile than the S&P 500.

Earnings & Valuation

This table compares Hub Group and XPO Logistics’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hub Group $4.03 billion 0.38 $135.15 million $4.05 11.10
XPO Logistics $15.38 billion 0.75 $340.20 million $2.40 39.83

XPO Logistics has higher revenue and earnings than Hub Group. Hub Group is trading at a lower price-to-earnings ratio than XPO Logistics, indicating that it is currently the more affordable of the two stocks.

Summary

XPO Logistics beats Hub Group on 8 of the 14 factors compared between the two stocks.

About Hub Group

Hub Group, Inc. is an asset-light freight transportation management company. The Company offers intermodal, truck brokerage and logistics services. It operates through two business segments: Mode and Hub. The Mode segment markets and operates its freight transportation services, consisting of intermodal, truck brokerage and logistics, primarily through agents entering into contractual arrangements with Mode Transportation, LLC (Mode LLC). The Mode segment also operates a temperature protected services division. The Hub segment provides intermodal, truck brokerage and logistics services through a network of operating centers throughout the United States, Canada and Mexico. The Hub segment services customers in a range of industries, including consumer products, retail and durable goods. It operates through a network of operating centers and independent business owners. The Company also provides drayage services with its own drayage operations.

About XPO Logistics

XPO Logistics, Inc. is a global provider of supply chain solutions. The Company operates in two segments: Transportation and Logistics. The Transportation segment provides freight brokerage, last mile, less-than-truckload (LTL), full truckload and global forwarding services. The Logistics segment provides a range of contract logistics services, including highly engineered and customized solutions, value-added warehousing and distribution, cold chain solutions and other inventory solutions. Its freight brokerage operations encompass truck brokerage globally, as well as intermodal, drayage and expedite services in North America. In Logistics segment, it provides warehousing and distribution solutions, such as factory support, aftermarket support, integrated manufacturing, packaging, labeling and transportation. As of December 31, 2016, the Company had more than 10,000 independent owner operators under contract to provide drayage, expedite, last mile and LTL services to its customers.

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