Hub Group Seeing Strong Volume And Leverage

Analysts at Piper Jaffray reiterate their “overweight” rating on Hub Group Inc HUBG, while raising their estimates for the company. Piper Jaffray mentions, “Class I Rail intermodal volumes grew 16.7% y-o-y during 2Q10 up from 8.0% during 1Q10 on similar year ago comps (vols were down 18.8% and 15.2% during 2Q09 and 1Q09). Intermodal vols have benefited from strong demand as shippers with lean inventories have started to build into recovery and ahead of peak shipping season.” “Ocean container import growth has in more recent months picked up ahead of peak shipping season. Potentially sustainable ocean growth trajectory into 2H10 would dump a material amount of incremental freight into the US Rail (Intermodal) network. We note record June China ocean exports a major tailwind for continued near term US Intermodal volumes… Truck market vols also accelerated during 2Q10 with tight capacity and fast rising yields. HUBG likely also sees margin pressure due to rising Truck purchased transportation costs albeit we have worked this into our gross yield compression assumption,” the analysts say. Piper Jaffray has raised the EPS estimate for FY10 from $1.14 to $1.16. More Analyst Ratings here.