UPS stock (NYSE: UPS) is positioned as a better investment choice compared to J.B. Hunt Transport Services stock (NASDAQ: JBHT) due to its superior profitability and lower valuation multiple. UPS trades at 17x forward expected earnings, while JBHT trades at 30x, indicating a potential for UPS to outperform in the coming years.
Despite UPS stock experiencing a 10% decline from early 2021 levels, JBHT stock has seen a 30% increase during the same period. However, UPS stock returns have been inconsistent, with a 30% increase in 2021, followed by declines in 2022 and 2023. On the revenue growth front, UPS has seen a 2.9% annual increase, reaching $91 billion in 2023, while JBHT's sales grew at an average rate of 11.5% to $12.8 billion over the same period.
UPS' profitability is highlighted by its operating margin increase from 9.1% in 2020 to 10% in 2023, outperforming JBHT's margin expansion from 7.4% to 7.7%. From a financial risk perspective, both companies are comparable, with UPS having higher debt but more cash cushion compared to J.B. Hunt.
Looking ahead, UPS is estimated to have a valuation of $151 per share, indicating a potential upside of over 15% from its current levels. In contrast, JBHT stock is trading at a higher multiple of 30x expected earnings for 2024, suggesting that UPS has more room for growth. While J.B. Hunt has shown better revenue growth and debt position, UPS' profitability and cash reserves make it a more favorable choice for investors.
Overall, the analysis suggests that UPS is poised to outperform JBHT in the next three years, supported by its financial metrics and growth potential. Investors are advised to consider these factors when making investment decisions in the transportation sector.
