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Here's Why Investors Should Dodge ZTO Express (ZTO) Now

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·3 min read
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ZTO Express ZTO is currently mired in multiple headwinds, which might discourage investors to park their money in the stock.

Let’s delve deeper.

An Underperformer: The ZTO Express stock has declined 16.9% over the past six months compared with its industry’s 4.9% fall in the same time frame.

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Zacks Investment Research


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Weak Zacks Rank and Style Score: ZTO currently carries a Zacks Rank #4 (Sell). Moreover, ZTO’s current Momentum Style Score of F shows its short-term unattractiveness.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 18.2% downward over the past 60 days. For the current year, the consensus mark for earnings has moved 7.4% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.

Other Headwinds: ZTO Express’ bottom-line growth is being dented by high operating expenses. Steep SG&A expenses might push up the operating expenses. Apart from other factors, increases in compensation, benefits and office expenditures are escalating the SG&A expenses. The metric increased 12.8% year over year in 2021.

Due to the prevalent pandemic, ZTO Express reduced its expectation for parcel volumes in 2022. While the newly guided range of 24.96-25.86 billion indicates an increase of 12-16% from the year-ago reported figure, the same is lower than the previous expectation of 26.30-27.64 billion.

Stocks to Consider

Better-ranked stocks within the broader Transportation sector include the following:

Golar LNG Limited GLNG currently has a Zacks Rank #2 (Buy). GLNG has a decent surprise history, as its earnings outperformed the Zacks Consensus Estimate in three of the preceding four quarters and missed the mark once, the average surprise being 42.1%.

Shares of Golar LNG have rallied more than 100% in a year. A strong LNG market boosted the stock. The staggering inflation flared up the oil and natural gas prices. Moreover, amid the Russia-Ukraine war, Europe is likely to look for gas supplies outside Russia. This is expected to drive demand for the LNG vessels, which bodes well for GLNG.

Star Bulk Carriers SBLK carries a Zacks Rank of 2 at present. SBLK's earnings surpassed the Zacks Consensus Estimate in three of the preceding four quarters and missed the mark once, the average surprise being 7.1%.


Shares of Star Bulk have gained more than 54% over the past six months. Improvement in economic activities is aiding the SBLK stock.



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ZTO Express Cayman Inc. (ZTO) : Free Stock Analysis Report
 
Star Bulk Carriers Corp. (SBLK) : Free Stock Analysis Report
 
Golar LNG Limited (GLNG) : Free Stock Analysis Report
 
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