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Will Airfreight Revenues Lift Expeditors (EXPD) Q3 Earnings?

Zacks Equity Research
·4 min read

Expeditors International of Washington Inc EXPD is scheduled to report third-quarter 2020 results on Nov 3.

The company has an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 18.3%. Let’s see whether the company is able to retain its beat streak in its upcoming quarterly results.

Factors to Note

Coronavirus-induced cancellation of multiple passenger flights (that usually carry freight as well as passenger luggage) has increased the usage of charters to meet customer needs. This is supporting growth of Airfreight Services revenues. With this segment being Expeditors’ primary revenue generator, its top line is expected to have benefited in the third quarter. The company’s acquisition of Fleet Logistics’ Digital Platform, completed in May, is also anticipated to have contributed to the top line. The Zacks Consensus Estimate for Airfreight revenues indicates a 33.1% surge from the year-ago reported number. The same for total revenues hints at an 11.6% rise from third-quarter 2019’s reported figure.

However, due to slowdown in the global economy as a result of the coronavirus pandemic, the Ocean Freight and Ocean Services, as well as the Customs Brokerage and Other Services segments might have experienced some softness in volumes, which in turn might reflect in segmental revenues. The Zacks Consensus Estimate for Ocean Freight and Ocean Services revenues suggests an approximate 5% decline in the third quarter from the year-ago period’s reported number.

Expeditors International of Washington, Inc. Price and EPS Surprise

Expeditors International of Washington, Inc. Price and EPS Surprise
Expeditors International of Washington, Inc. Price and EPS Surprise

Expeditors International of Washington, Inc. price-eps-surprise | Expeditors International of Washington, Inc. Quote

What Does the Zacks Model Say?

Our proven model does not conclusively predict an earnings beat for Expeditors this time around. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Expeditors has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at 98 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Expeditors carries a Zacks Rank #2.

Highlights of Q2 Earnings

In the last-reported quarter, the company delivered an earnings surprise of 65.2%. Total revenues also surpassed the Zacks Consensus Estimate. While the top line soared 26.8% year over year, the bottom line surged 23.9%. Uptick in airfreight revenues, thanks to coronavirus-led multiple passenger flight cancellations, leading to an increased usage of charters, boosted results.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Werner Enterprises Inc WERN, United Parcel Service Inc UPS and Schneider National Inc SNDR as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Werner has an Earnings ESP of +2.78% and a Zacks Rank #1. The company will release third-quarter earnings numbers on Oct 28.

UPS has an Earnings ESP of +4.52% and a Zacks Rank #2. The company will announce third-quarter results on Oct 28.

Schneider has an Earnings ESP of +1.82% and a Zacks Rank of 2. The company will release third-quarter earnings on Oct 29.

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