Shares of Hub Group plunge due to accounting mistake

Hub Group Shares Plummet Following Accounting Misstatement

Hub Group's stock dropped by 19% during Friday's midday session after the company disclosed a $77 million underreporting in its purchased transportation expenses. The company revealed that this accounting oversight took place over the first three quarters of 2025, prompting a review of its financial statements. As a result, Hub Group has postponed the release of its fourth-quarter and annual financial reports until the issue is resolved.

According to a company statement, the correction is expected to raise transportation and warehousing costs for the nine months ending September 30, 2025. However, the exact impact on these expenses and accounts payable is still being determined.

Hub Group (NASDAQ: HUBG) intends to revise its financial statements for the first three quarters of 2025 and will also evaluate potential effects on its 2024 and 2023 results.

The company stated that its cash reserves and operating cash flow, which amounted to $194 million in 2025, should remain unaffected by this adjustment.

On Thursday, after the market closed, Hub Group released a preliminary update for the fourth quarter, sharing only select financial figures. The company held a pre-recorded call to discuss these early results and indicated that comprehensive updates would be provided as soon as possible.

“At Hub Group, ensuring the accuracy and clarity of our performance reporting is a top priority,” said Phil Yeager, President, CEO, and Vice Chairman. “We are committed to sharing our complete financial results promptly and are strengthening our internal processes. Our team remains dedicated to delivering innovative solutions and exceptional service to our customers.”

The announcement led some industry analysts to downgrade Hub Group’s stock.

Richa Harnain, an analyst at Deutsche Bank (NYSE: DB), noted that the understated expenses could reduce the company’s already low operating margin by about 300 basis points.

In a note to clients, Harnain explained, “This adjustment equates to 2.8% of revenue, or more than 65% of Hub Group’s EBIT. After fully accounting for this cost, the company’s adjusted operating margin for the first nine months of 2025 would be approximately 1.4%, a significant drop from the previously reported 4.4%.”

She added that there may be mitigating factors, suggesting the final impact on margins could be less severe than initially anticipated.

Early Fourth-Quarter Results

During the fourth quarter, revenue from Intermodal and Transportation Solutions experienced a slight year-over-year decline. Intermodal volumes rose by 1% compared to the previous year, while revenue per load remained unchanged.

Additional Financial Highlights

In January, intermodal load volumes decreased by 4% year-over-year, with winter storms negatively affecting performance. The company also faced a tough comparison to January 2025, when shippers accelerated orders to avoid tariffs.

Dedicated revenue fell during the fourth quarter. Brokerage volumes declined by 10% year-over-year, and revenue per load dropped by 4%.

For the full year 2025, Hub Group reported revenue of about $3.7 billion, representing a 7% decrease from the previous year. The company projects 2026 revenue to fall between $3.65 billion and $3.95 billion, which encompasses the consensus estimate of $3.77 billion.