Here's Why Investors Should Retain Expeditors (EXPD) Now
Expeditors International of Washington, Inc. EXPD is benefiting from its pro-investor steps and solid liquidity. However, increased operating expenses are worrisome.
Factors Favoring EXPD
We are impressed by Expeditors' efforts to reward its shareholders. In May 2022, the company had announced a 15.5% hike in semi-annual cash dividend to 67 cents per share (annualized $1.34). EXPD hiked its dividend by a further 3% this year, thereby raising its semi-annual cash dividend to 69 cents per share.
The company is also active on the buyback front. In the COVID-19-ravaged 2020, it repurchased 4.6 million shares on an average price of $72.26 per share.
During 2021, the company repurchased 4.4 million shares at an average price of $117.54. In 2022, EXPD repurchased 14.5 million shares of common stock at an average price of $108.88. In the first half of 2023, it repurchased 8 million shares of common stock at an average price of $113.23.
Expeditors' healthy current ratio (a measure of liquidity) is encouraging. The metric stood at 2.21 at the end of second-quarter 2023. A current ratio in excess of 1 indicates that a company has enough short-term assets on hand to cover all short-term liabilities.
Key Risks
Expeditors is being hurt by an increase in operating expenses. Notably, operating expenses climbed more than 4% year over year in 2022 despite the company's cost-cutting initiatives to combat weak demand. High operating expenses are restricting bottom-line growth.
Zacks Rank
EXPD currently carries Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks for investors interested in the Zacks Transportation sector are GATX Corporation GATX and Triton International Limited TRTN.
GATX, which presently carries a Zacks Rank #2 (Buy), has strengthened its railcar leasing operations. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For third-quarter and 2023, GATX’s earnings are expected to register 36.6% and 14.3% growth, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2, is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. Its current ratio (a measure of liquidity) was 3.83 at the end of second-quarter 2023. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.
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Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
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