J.B. Hunt Transport Services, Inc.JBHTNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $193.08 per share(market-calibrated)

-16.8%

Upside to Fair Value

Current

$232.07

Pure Model

$185.64

Fair Value

$193.08

Bull Case

$229.58

Bear Case

$143.83

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

5.78%

Calibrated Growth

3.13%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $185.64.

What's Driving This Ratingfor JBHT

↓

CapEx normalizing toward maintenance

Historical CapEx is 9.91% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$1.1B in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 7.91% — below the sector mature average of 13.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.9B (11.33% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 3.35% in Year 1 to 0.88% by Year 5 (per analyst consensus). That's below the 2.25% terminal rate, so growth re-accelerates in Years 6-10 — a generous assumption. This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $131.07/share (13.9x terminal FCF) while exit multiple gives $240.20/share (28.9x terminal FCF). The 18x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.25% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $232.07, the market implies 5.78% perpetual growth — 353bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 62.36% indicates efficient cash generation. FCF reaches $1.8B by Year 10 (10.62% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.26

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.18%

Cost of Debt

Pre-tax Cost of Debt3.32%

Tax Rate24.66%

After-tax Cost of Debt2.50%

Equity Weight (E/V)92.31%

Debt Weight (D/V)7.69%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (92.31% × 10.18%) + (7.69% × 2.50%)

= 9.59%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$12.4B	$13.9B	$15.4B	$15.8B	$16.8B
EBIT	$981M	$1.1B	$1.2B	$1.5B	$1.9B
Tax	$242M	$272M	$301M	$380M	$469M
NOPAT	$739M	$830M	$920M	$1.2B	$1.4B
+ Depreciation	$706M	$793M	$879M	$902M	$956M
- Capex	$1.2B	$1.2B	$1.1B	$893M	$588M
- Δ NWC	$21M	$36M	$7M	$12M	$19M
Free Cash Flow	$195M	$405M	$701M	$1.2B	$1.8B
Discount Factor	0.912	0.760	0.633	0.527	0.400
Present Value	$178M	$308M	$444M	$611M	$713M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.8B

Terminal Growth Rate2.25%

WACC9.59%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$24.8B

PV of Terminal Value$9.9B

Exit Multiple Method

Year 10 EBITDA$2.9B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$51.5B

PV of Terminal Value$20.6B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$4.7B

PV of Terminal Value$9.9B

Enterprise Value$14.7B

(-) Net Debt$1.9B

Equity Value$12.8B

Shares Outstanding98M

Price per Share$131.07

Exit Multiple Method

PV of Projected FCFs$4.7B

PV of Terminal Value$20.6B

Enterprise Value$25.3B

(-) Net Debt$1.9B

Equity Value$23.5B

Shares Outstanding98M

Price per Share$240.20

Pure Model Fair Value

$185.64

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
7.59%	$232.54	$238.91	$246.48	$255.61	$266.84
8.59%	$203.14	$207.47	$212.47	$218.34	$225.30
9.59%	$179.10	$182.16	$185.64	$189.62	$194.23
10.59%	$158.95	$161.18	$163.68	$166.50	$169.70
11.59%	$141.75	$143.42	$145.27	$147.33	$149.63

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$143.83

-38.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.58

Base Case

$185.64

-20.0% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.26

Bull Case

$229.58

-1.1% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 1.07

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth3.35%

Year 3 Revenue Growth5.16%

Year 5 Revenue Growth0.88%

Year 7 Revenue Growth1.43%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin7.91%

Terminal EBIT Margin13.00%

Tax Rate24.66%

Historical Capex / Rev9.91%

Terminal Capex / Rev3.50%

NWC / Revenue5.20%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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