Why Hub Group (HUBG) Stock Is Tanking Today

NEW YORK (TheStreet) -- Shares of Hub Group Inc (HUBG)  are tanking 7.50% to $40.06 after the trucking company was downgraded to "market perform" from "strong buy" at Raymond James (RJF) this morning, following its outlook update in an 8-K filing regarding complaints filed on behalf of a class comprised of present and former employees.

Analysts at the firm removed its $59 price target.

Hub Group decided today to make settlement offers to individual drivers, amounting to a total of approximately $9.5 million in connection with its two complaints. In addition, the company expects to pay $1 million in legal and travel costs related to the settlements.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

One complaint was filed against Hub Group who allegedly misclassified a group of former California-based truck drivers as independent contractors instead of employees.

A second complaint alleging similar claims was filed on July 24, but the company believes the truck drivers were properly classified.

Separately, TheStreet Ratings team rates HUB GROUP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate HUB GROUP INC (HUBG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HUBG's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HUBG's debt-to-equity ratio is very low at 0.09 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.50, which illustrates the ability to avoid short-term cash problems.
  • The company's net income has grown in line with that of the S&P 500 when compared to the same quarter one year ago, and it has greatly exceeded that of the Air Freight & Logistics industry average. The net income increased by 0.3% when compared to the same quarter one year prior, going from $18.61 million to $18.68 million.
  • Net operating cash flow has significantly increased by 104.86% to $13.06 million when compared to the same quarter last year. In addition, HUB GROUP INC has also vastly surpassed the industry average cash flow growth rate of -66.67%.
  • HUB GROUP INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HUB GROUP INC increased its bottom line by earning $1.87 versus $1.84 in the prior year. This year, the market expects an improvement in earnings ($2.04 versus $1.87).
  • You can view the full analysis from the report here: HUBG Ratings Report

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE

More from Markets

Red Robin Slumps After Earnings Miss

Red Robin Slumps After Earnings Miss

Owner of Moviepass Sees Stock Plummet

Owner of Moviepass Sees Stock Plummet

Tiffany & Co. Sees a Strong Market in Asia

Tiffany & Co. Sees a Strong Market in Asia

Stocks Finish Higher After Release of Fed Minutes

Stocks Finish Higher After Release of Fed Minutes

General Electric's Stock Gets Routed as CEO Flannery Flubs Presentation

General Electric's Stock Gets Routed as CEO Flannery Flubs Presentation