Even though Expeditors International of Washington EXPD is grappling with supply-chain issues due to the coronavirus pandemic, its shares have gained 6% in the past month.
What’s Working in Expeditors’ Favor?
With Expeditors’ significant exposure to China, the extended closure of factories in the country due to the coronavirus outbreak dented its freight volumes in the first quarter of 2020. Notably, both airfreight tonnage and ocean container also volumes contracted 7% and 10%, respectively, year over year. Moreover, operating income dropped 15% to $159 million in the period.
Expeditors delivered better-than-expected earnings per share despite several headwinds hounding the stock. This, in turn, pleased investors and contributed to the share price uptick.
We are impressed by Expeditors' efforts to reward its shareholders through dividend payments and buybacks. In first-quarter 2020, the company repurchased 4 million shares at an average price of $70.81 per share.
Moreover, on May 6, this Zacks Rank #3 (Hold) company announced a 4% hike in its semi-annual cash dividend of52 cents per share (annualized $1.04). The first installment of the increased dividend will be paid out on Jun 15, 2020 to its shareholders of record on Jun 1.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Expeditors’ trailing 12-month return on equity (ROE) supports its growth potential. The company’s ROE of 27% compares favorably with its industry’s ROE of 15% and the S&P 500 Index’s 18.5%. The favorable readings underline the company’s efficiency in utilizing its shareholders’ funds.
The dividend raise in such challenging times is a huge positive. In fact, we are encouraged by Expeditors’ sound balance sheet. As of Mar 31, 2020, the company had no long-term debt (other than lease liabilities), mainly due to its asset-light business model. The company exited the quarter with cash and cash equivalents worth $1,112 million and the current portion of its operating lease liabilities was $63.74 million.
Better-ranked stocks in the Zacks Transportation sector include Danaos Corporation DAC, Euronav NV EURN and Diamond S Shipping DSSI,each carrying a Zacks Rank #2 (Buy).
Earnings of both Danaos Corporation and Euronav NV surpassed the Zacks Consensus Estimate in each of the last four quarters. While Diamond S Shipping’s bottom line beat the consensus mark in two of the preceding four quarters, missing the same on other two occasions.
The average trailing four-quarter beat for Danaos Corporation, Euronav NV and Diamond S Shipping is 13.7%, 19.7% and 8.1%, respectively.
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Expeditors International of Washington Inc (EXPD) : Free Stock Analysis Report
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