J.B. Hunt Transport Services (JBHT)

Total return at 5 years: -1.0%/year = -1.8% appreciation + 0.9% dividend. The target price ($208) is ex-dividend; the $10 in dividends collected over 5 years are added separately.

The methods disagree: one places the value today above the price ($228) and the other below.

Today — expensive, no margin of safety: at $228 trades ~30.2% above its value discounted to today (~$175); the expected return does not even reach the risk-free rate (4.5%).

At 5 years — Sobrevalorado: the expected total return is negative — the price already discounts a demanding scenario that, if not met, results in a loss.

The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$110.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($228) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (1.9%/year) than we project (5.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$1 bn of owner earnings in year 5 (vs ~$1.2 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). Cash accumulates the retained surplus —what is not returned as dividend or buyback—, so that EV falls and multiples compress going forward. The valuation is done on EV/NOPAT — suma de las partes por segmento. In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

J.B. Hunt operates five segments of different natures (intermodal, dedicated, freight brokerage, final mile and truckload), so the valuation is a sum of the parts: each segment contributes a fraction of consolidated terminal-year net operating profit (NOPAT) and is assigned the multiple of ITS own nature, not a single multiple on the consolidated figure. Intermodal (JBI) and Dedicated (DCS) account for close to eight of every ten dollars of projected NOPAT and carry the group's highest multiple, supported by proprietary container/chassis design, the long-standing alliance with the Class I railroads and 3-to-10-year contracts with customer retention close to 96% in DCS. Freight brokerage (ICS), final mile (FMS) and truckload (JBT) are smaller-scale, more competitive businesses with thin margins —ICS operated at barely breakeven in 2024 and 2025, FMS has been losing accounts and JBT is highly standardized dry van transport— and carry multiples at the floor of their respective bands. Year 0 is the TTM ended June 2026 ($12.70bn of revenue), which already reflects the turn in the freight cycle: after three years of contraction (2023 to 2025), the second quarter of 2026 showed revenue +19% and operating income +32% year over year, driven by higher intermodal and brokerage volume and by the recovery in rates. The base path normalizes that pickup —it avoids extrapolating the one-off second-quarter jump, which includes a fuel surcharge component— and converges toward medium-term category growth of 4% a year, with the consolidated operating margin expanding gradually from 7.5% today toward 9.3% by year 5, a level barely above the peak of the last freight upcycle (2022). Share repurchases are material (diluted shares fell from 105.3 to 97.7 million between 2022 and 2025) and are modeled with an explicit share path (approach B, §6), not cash accumulation: the company's real excess cash is minimal ($4.2 million) and free cash flow goes mostly to buybacks and the dividend.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $208 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $228, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $208 in 5 years plus $10 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $175. Against the current market price ($228), the margin of safety is -30.2% (trades above the maximum → a premium is paid) and the total return at that price would be -1.0% annually.

• Multiple on current earnings. The current price implies 32× trailing-twelve-month after-tax operating income, high for a cyclical carrier.
• Exit multiple used. The 14.6x NOPAT blend already sits in the upper third of the segment bands, leaving no additional cushion in the positioning.
• Rebound already priced in. The price already reflects the sharp 2026 freight-cycle rebound.
• Expected total return. The base scenario's -1% against the current price summarizes the Overvalued verdict.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✓ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (165%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Cash generation. Free cash flow was negative in 2023 due to peak fleet-expansion capex and recovered starting in 2024.
• Return on capital. ROIC of 15.00% sits in the good-to-excellent band against the 10% bar.
• Reinvestment runway. Capex stayed below depreciation during the cycle contraction; reinvestment is gradually resuming with the recovery.
• Cash conversion. Trailing-twelve-month net income (US$0.68bn) is below free cash flow (US$1.10bn), reflecting the currently low level of capex.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Each segment is measured by its own volume-by-price pair: in JBI and JBT, loads by revenue per load; in DCS, trucks by revenue per truck-week; in ICS, loads by revenue per load and gross margin on brokerage; in FMS, stops completed. The weekly fuel surcharge is adjusted to the cost of diesel and explains much of the difference between reported revenue growth and revenue growth excluding that surcharge.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Recent momentum. Revenue +19% and operating income +32% year over year in the second quarter of 2026, after three years of contraction.
• Segment mix. Intermodal and Dedicated, the highest-quality segments, account for close to eight of every ten dollars of projected operating income.
• Sustainability of the rebound. Part of the reported growth includes the fuel surcharge and compares against an easy 2025 base.
• Declining segments. Final Mile Services lost accounts and cut its operating income in half between 2024 and 2025.

• Revenue recurrence. High in DCS due to long-term contracts; low in JBI, ICS, and JBT, which have no long-term contracts with customers.
• Product differentiation. Proprietary containers and chassis in JBI give a genuine operating advantage; JBT and FMS are more standardized services.
• Pricing power. The fuel surcharge passes through the cost of diesel, but base rates compete in a fragmented, cyclical market.
• Operating leverage. Visible in the second quarter of 2026: revenue +19%, operating income +32% on the same volume increase.
• Behavior in recessions. Revenue fell 13.4% in 2023 and kept contracting through 2025, showing high sensitivity to the freight cycle.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✓Leverage (net debt / EBITDA)Net debt / EBITDA 0.7x
• ✓Interest coverage (EBIT / interest)14.5x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 165% of ROIC
• !Value creation (ROIC − 10% bar)+5pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.7x — no over-investment
• –Float / working capitalNeutral WC
• ✓Dilution (SBC % of revenue + shares)SBC 0.6% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Net debt of just US$1.14bn against equity of US$3.66bn; the balance sheet is not stretched.
• Liquidity. Cash on hand is minimal (US$4.2M) but operating cash generation comfortably covers current needs.
• Interest coverage. Trailing-twelve-month net interest expense (~US$66M) is a small fraction of operating income.
• Working capital. Receivables grew alongside the first-half 2026 revenue rebound, a normal use of cash during a recovery phase.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Alignment of interests. The founding family holds 19.4% of shares outstanding via Johnelle Hunt, providing long-term alignment.
• Capital allocation. Prioritizes share buybacks funded with operating cash, without levering the balance sheet to fund them.
• Leadership continuity. Shelley Simpson became CEO in 2024 after a long internal career at the company.
• Communication transparency. Earnings releases detail each segment's contribution and explain the drivers behind each variance.

• There is no evidence of missing buyers: JBHT is a liquid component of the S&P 500 and the Dow Jones Transportation Average, with broad analyst coverage.
• There is no evidence of motivated sellers: the second-quarter 2026 earnings surprise was positive (earnings per share +45% year over year), not a negative event driving the price below value.
• The price instead reflects genuine optimism about the durability of the freight-cycle recovery, supported by sustained share buybacks and the margin improvement seen in the quarter.

With no identifiable source of missing buyers or motivated selling, No margin of safety: the price already discounts a demanding scenario. — the $228 price appears to reflect the reality of a cyclical recovery already underway, rather than a perception-versus-value discrepancy in the buyer's favor.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at -12%/year (-47% total): the margin of safety protects the downside. The bull (+6%/year, +35% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Freight cyclicality. Trucking demand is highly sensitive to the economic cycle, with recurring excess capacity during downturns.
• Customer concentration. The top 10 customers account for close to 33% of revenue, with no long-term contracts in several segments.
• Rail dependence. The intermodal business depends on the capacity and service of BNSF and Norfolk Southern.
• Labor regulatory risk. A reclassification of independent contractors as employees would materially raise labor costs.
• Fragmented competition. The trucking industry has low barriers to entry and numerous competitors of all sizes.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: narrow moat, eroding.

• Peter Lynch Growth at a reasonable price (GARP)

  A stalwart growing 5% at a multiple/growth of 6.3 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 4% (EBIT/EV) + ROIC 15% → falls outside the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts 2% vs our 5%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -13%/yr over 5y (material loss) → risk of permanent capital loss.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, eroding; sources: switching costs, efficient scale, intangibles, cost advantage → fails the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting 2%, within what we project (5%) — the story squares with the numbers.