Less than a year after inflating profitability with an accounting change, Hub Group (HUBG), a provider of transportation and logistics management services, is using the same accounting gimmick to once again inflate earnings.

In November 2024, DuDil warned investors Hub Group was artificially inflating earnings by extending its useful life estimates of certain transportation equipment from sixteen to twenty years.

The change inflated operating income $5 million, or 15.8%.

Since then, Hub Group’s shares are down 22.58%, versus the S&P 500’s gain of 15.04% over the same period.

Less than one year later, Hub Group has once again extended its useful life estimates for certain transportation equipment— suddenly the company now says those assets will last 25-years.

Without a detailed explanation, Hub Group says the same equipment that historically lasted 16-years will now last 25-years, an increase of 56% in just a year.

Likewise, earlier this year Hub Group also extended the useful lives of certain computer software from 7 to 10 years.

This year’s changes increased Hub Group’s:

—Operating income $2.1 million, or 7.6% in the third quarter 2025
—Operating income $4.5 million, or 4.2% in the nine months ended September 30, 2025
—Earnings per Share (EPS) $0.03, or 6.8% in the third quarter 2025

Notably, DuDil warned last year Hub Group’s new accounting treatment appeared more aggressive than competitors:

—FedEx (FDX) estimates the useful life for its trailers— similar to containers— at no more than fifteen years
—Forward Air (FWRD) estimates the useful life of all its equipment at no more ten years

With an Enterprise Value (EV) of approximately $2.6 billion, Hub Group is priced as if it will grow annual sales to more than $9.7 billion, up from an estimated $3.6 billion in FY25. To justify its current share price of $35.96 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates Hub Group must:

—Grow sales 9.5% annually for the next decade, versus the company’s estimated FY25 sales growth of (6.7%) and three-year average of (0.4%)
—Increase NOPAT margin to 6%, versus our FY24 estimate of 2.65% and three-year average estimate of 4.55%
—Increase Invested Capital (IC) Turns to 1.9, up from our FY24 estimate of 1.6

Notably, the current share price also implies Hub Group increases Return on Invested Capital (ROIC) to 11.4% from our FY24 estimate of 3.86% and three-year average estimate of 8.69%: