5 Reasons Why Investors Should Bet on ZTO Express (ZTO) Stock
ZTO Express ZTO is benefiting from strength across its core express delivery services unit. ZTO’s shareholder-friendly initiatives also look encouraging.
Against this backdrop, let’s look at the factors that make this stock an attractive pick.
What Makes ZTO Express an Attractive Pick?
Solid Rank & VGM Score: ZTO Express currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company seems to be an appropriate investment proposition at the moment.
Northward Estimate Revisions:The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the past 90 days, the Zacks Consensus Estimate for ZTO Express 2023 earnings has moved up 2.02% year over year.
Earnings Expectations: Earnings growth and stock price gains often indicate a company’s prospects. For third-quarter 2023, ZTO Express’s earnings are expected to grow 6.06% year over year. For 2023 and 2024, ZTO Express’s earnings are expected to grow 22.76% and 23.51%, year over year, respectively.
Positive Earnings Surprise History: ZTO Express has an impressive earnings surprise history. The company has surpassed the Zacks Consensus Estimate in each of the last four quarters. The average beat is 21.95%.
Growth Factors: ZTO Express is benefiting from strong performance of the core express delivery services unit. Notably, revenues from the unit increased 14.1% year over year in second-quarter 2023. The uptick was driven by a 23.8% increase in parcel volume and a 7.8% decrease in parcel unit price. Parcel volume market share increased to 23.4% in the reported quarter. ZTO Express continues to expect 2023 parcel volume in the range of 29.27-30.24 billion.
We are also impressed with ZTO Express’s efforts to reward its shareholders. As of Jun 30, 2023, ZTO Express purchased 38,473,231 ADSs at an average purchase price of $25.18, including repurchase commissions. The company’s board of directors has further approved changes to its existing share repurchase program, increasing the value of shares to be repurchased from $1 billion to $1.5 billion and extending the effective time by one year through Jun 30, 2024.
Other Stocks to Consider
Investors interested in better-ranked stocks from the Zacks Transportation sector are United Airlines (UAL) and SkyWest, Inc. (SKYW). United Airlines presently sports a Zacks Rank #1, while SkyWest carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
United Airlines has an expected earnings growth rate of more than 100% for the current year. UAL delivered a trailing four-quarter earnings surprise of 21.44%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved 18.9% over the past 90 days. Shares of UAL have soared 34.5% year to date.
SkyWest's fleet-modernization efforts are commendable.Fall in operating expenses is a tailwind for SkyWest. In second-quarter 2023, the metric dipped 2.4% to $693.8 million due to a fall in operating costs. Low operating expenses boost bottom-line results. Shares of SKYW have surged 144.6% year to date.
SKYW delivered a trailing four-quarter earnings surprise of 31.51%, on average.
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