Threat of Rail Strike Pressures Hub Group's Q3 Intermodal Volumes; Margins Remain Healthy

Narrow-moat Hub Group’s top line grew 26% year over year, driven by strong contract pricing tailwinds, higher fuel surcharges, and tuck-in acquisitions. However, sales came in modestly below our forecast on lower-than-expected intermodal container volumes. We don’t expect to materially alter our fair value estimate of $75 per share. Shares have dipped this year amid potential economic headwinds and in our view are trading in fairly valued territory.