It has been about a month since the last earnings report for Expeditors International (EXPD). Shares have added about 7.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Expeditors International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Earnings Beat at Expeditors in Q1
Expeditors' earnings of 71 cents per share surpassed the Zacks Consensus Estimate by 3 cents. The earnings beat in such challenging times seems to have pleased investors. As a result, the stock gained in early trading. However, the bottom line decreased 11.3% on a year-over-year basis.
Further, total revenues of $1,901.9 marginally missed the Zacks Consensus Estimate of $1,902.7 and also declined 5.9% year over year. The top line was hurt by supply-chain disruptions due to the coronavirus pandemic. The extended closure of factories in China due to the virus outbreak dented freight volumes in the March quarter.
Notably, volumes pertaining to airfreight tonnage and ocean container contracted 7% and 10%, respectively, year over year. Operating income dropped 15% to $159 million in the first quarter of 2020. Factory shutdowns apart, commercial flight cancellations and reduced ocean sailings resulted in the double-digit fall in operating income.
During the first quarter, the company repurchased 4 million shares at an average price of $70.81 per share. The company exited the quarter with cash and cash equivalents of $1.11 billion compared with $1.23 million at the end of 2019.
Airfreight Services revenues slid 0.8% year over year to $709 million in the first quarter. Ocean Freight and Ocean Services revenues deteriorated 13.2% to $493.4 million. Moreover, Customs Brokerage and Other Services revenues decreased 5% year over year to $699.4 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -13.91% due to these changes.
At this time, Expeditors International has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Expeditors International has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
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