Expeditors Tops Earnings, Lags Rev

Zacks

Expeditors International of Washington Inc. (EXPD) reported second-quarter 2013 adjusted earnings of 45 cents per share, ahead of the Zacks Consensus Estimate of 43 cents. Earnings for the quarter increased 15.4% from 39 cents in the previous year quarter.

Total revenue dipped 0.3% year over year to $1.50 billion, missing the Zacks Consensus Estimate of $1.54 billion.

Gross profit (net revenue) increased 3.4% year over year in the second quarter to $469.1 million. Gross margin (yield) was 31.3%, as compared to 30.1% in the previous year quarter. Operating income rose 8.4% year over year to $143.6 million.

Revenue Segments

Airfreight Services revenues increased a mere 0.7% year over year to $638.5 million in the second quarter of 2013.

Ocean Freight and Ocean Services revenues decreased 5.2% year over year to $492.0 million in the second quarter of 2013.

Customs Brokerage and Other Services revenues inched up 5.2% year over year to $365.5 million in the second quarter of 2013.

Liquidity

Expeditors exited the second quarter with operating cash flows of $84.0 million compared with $92.8 million in the year-ago quarter. At the end of second quarter of 2013, the company had cash and cash equivalents of $1.29 billion as compared to $1.26 billion at the end of 2012.  

Other Stocks

Another logistic company, C.H. Robinson Worldwide Inc. (CHRW), reported second-quarter results on Aug 6, 2013 after the market close. The company’s adjusted earnings of 70 cents failed to beat the Zacks Consensus Estimate of 74 cents.

Currently, Expeditors carries a Zacks Rank #3 (Hold). Other stocks worth considering in this sector include Arkansas Best Corporation (ABFS) and Con-Way Inc. (CNW). Both these companies have a Zacks Rank #2 (Buy).

Our Analysis

For the long term, we believe Expeditors is poised for growth as it plans to expand its presence and operations internationally, as well as invest in new opportunities and services. Nevertheless, we remain cautious about the near-term softness in demand, particularly in airfreight. We expect lower demand caused by macroeconomic factors and higher freight rates charged by third party carriers to continue, thus, creating significant headwinds over the near term.

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