Here's Why You Should Avoid ZTO Express (ZTO) Stock Now
ZTO Express (ZTO) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for fourth-quarter 2023 earnings has been revised 16% downward over the past 90 days. For 2023, the consensus mark for earnings has moved 1.3% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: ZTO Express currently carries a Zacks Rank #5 (Strong Sell).
Unimpressive Price Performance: ZTO Express has lost 20.2% over the past three months against its industry’s 5.3% growth.
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Other Headwinds: ZTO Express is being hurt by higher selling, general and administrative expenses, which are pushing up operating expenses and hurting the bottom line. The domestic express delivery market is highly competitive due to the presence of big players like SF Express and STO Express. The company’s stock price may decrease if competition intensifies and becomes a hindrance.
Bearish Industry Rank: The industry, to which ZTO belongs, currently has a Zacks Industry Rank of 186 (of 250 plus groups). Such an unfavorable rank places it in the bottom 26% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Stocks to Consider
Some better-ranked stocks from the Zacks Transportation sector are Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation WAB and SkyWest, Inc. SKYW. Each stock presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wabtec has an expected earnings growth rate of 22.43% for the current year. WAB delivered a trailing four-quarter earnings surprise of 7.11%, on average.
The Zacks Consensus Estimate for WAB’s current-year earnings has improved 4.9% over the past 90 days. Shares of WAB have gained 27.2% in the past year.
SkyWest's fleet-modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s current-year earnings has improved 38.9% over the past 90 days. Shares of SKYW have surged 217.7% year to date.
SKYW delivered a trailing four-quarter earnings surprise of 32.57%, on average.
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SkyWest, Inc. (SKYW) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
ZTO Express (Cayman) Inc. (ZTO) : Free Stock Analysis Report
