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Will the Expeditors (EXPD) Stock Disappoint in Q2 Earnings?

Zacks Equity Research

Expeditors International of Washington, Inc. EXPD is slated to report second-quarter 2019 results on Aug 6, before the market opens.

Last reported quarter, the company witnessed a negative earnings surprise of 5.9%. However, total revenues outpaced the Zacks Consensus Estimate. Moreover, both the top and the bottom line improved on a year-over-year basis.

Let’s see, how things shape up for this announcement.

Factors Likely at Play

The company’s Airfreight Services segment is likely to perform disappointingly in the second quarter as was the case in the first due to declining airfreight tonnage. Notably, while releasing first-quarter results, the company stated that its airfreight business was "challenged". Evidently, the Zacks Consensus Estimate for second-quarter Airfreight revenues stands at $754 million, much lower than $802 million reported in the year-ago period. Lower revenues at this key segment might largely affect the company’s overall performance.

Moreover, with Expeditors’ substantial exposure to China, the ongoing Sino-U.S. trade tensions might dent profits in the soon-to-be-reported quarter due to soft shipment volumes. Additionally, rising operating expenses are likely to put pressure on the company’s bottom-line growth.

However, higher revenues from Ocean Freight and Ocean Services as well as Customs Brokerage and Other Services are anticipated to partly mitigate this adversity. Notably, the Zacks Consensus Estimate for second-quarter revenues at the Ocean Freight and Ocean Services segment is pinned on $562 million, higher than $530 million reported in the year-earlier period. The same for Customs Brokerage and Other Services revenues is pegged at $745 million, above $626 million reported in the second quarter of 2018.

What Does Our Model Say?

Our proven model does not conclusively show that Expeditors is likely to beat on earnings this quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as highlighted below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Expeditors has an Earnings ESP of -3.51% as the Most Accurate Estimate is pegged at 78 cents, lower than the Zacks Consensus Estimate of 81 cents.

Zacks Rank: Expeditors carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (4 or 5) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

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


Stocks to Consider

Investors interested in the broader Transportation sector can check out stocks like Frontline Ltd. FRO, Saia, Inc. SAIA and SkyWest, Inc. SKYW as these possess the right combination of elements to come up with an earnings beat in their next releases.

Frontline has an Earnings ESP of +400.03% and a Zacks Rank #3. The company is scheduled to report second-quarter earnings on Aug 30.

Saia has an Earnings ESP of +1.22% and a Zacks Rank of 3. The company will announce second-quarter results on Jul 31.

SkyWest has an Earnings ESP of +3.25% and a Zacks Rank #2. The company is slated to release second-quarter earnings numbers on Jul 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

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