Here's Why You Should Retain Expeditors (EXPD) in Portfolio
Expeditors International of Washington, Inc. EXPD is benefiting from its solid shareholder-friendly steps as well as solid liquidity. However, high capital expenses are a concern.
Factors Favoring EXPD
We are impressed by Expeditors' efforts to reward shareholders through dividend payments and buybacks. In the COVID-19-ravaged 2020, the company repurchased 4.6 million shares at an average price of $72.26 per share. During 2021, it repurchased 4.4 million shares at an average price of $117.54.
In May 2022, management announced a 15.5% hike in semi-annual cash dividend to 67 cents per share (annualized $1.34 per share). In 2022, EXPD repurchased 14.5 million shares of common stock at an average price of $108.88. In May 2023, it hiked its dividend by 3%, thereby raising its semi-annual cash dividend to 69 cents per share.
Expeditors' increasing current ratio (a measure of liquidity) is encouraging. The measure stood at 2.42 at the end of first-quarter 2023 compared with 2.20 in the fourth-quarter 2022 end.
Key Risks
High capital expenditures are likely to hurt Expeditors' bottom line. Capital expenditure for 2022 was $86.8 million, much higher than $36.2 million reported in 2021. Such high capex in such a weak demand environment is not a welcome development.
Zacks Rank
EXPD currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. CPA and Triton International Limited TRTN.
Copa Holdings, which presently flaunts a Zacks Rank #1 (Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register a 912.5% and 84.14% surge, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2 (Buy), is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. TRTN’s current ratio (a measure of liquidity) was 3.97 at the end of first-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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