Industrials
The Covid crisis allowed HUBG to produce record growth and profits - sales and margins surged on a 40%+ intermodal pricing increase. However, these effects are now reversing. Import volumes and port congestion are falling. Pricing is easing. Transportation could end up in a glut quickly. Multiples may appear low, but they are based on sustaining record margins. Margins closer to longer term averages (let alone recessionary levels) implies HUBG is an expensive stock. HUBG benefitted the most from the rise in pricing vs. peers. As such, Eric Fernandez expects them to be hurt the worst as prices turn down.
Edition: 148
- 11 November, 2022