It has been about a month since the last earnings report for ZTO Express (Cayman) Inc. (ZTO). Shares have lost about 5.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ZTO Express (Cayman) Inc. due for a breakout? 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 Miss at ZTO Express in Q1
The company's first-quarter 2019 earnings of 18 cents per share missed the Zacks Consensus Estimate by a penny. However, the bottom line improved substantially year over year.
Meanwhile, the top line rose significantly year over year to $681.6 million (RMB 4,574 million). This upside was driven by a 31.5% year-over-year surge in revenues from the company’s express delivery services unit.
Segmental revenues were boosted by a 41.6% jump in parcel volume to 2,264 million. Freight forwarding services (acquired during the fourth quarter of 2017) contributed 6.3% to the top line. The 38.4% rise in revenues from sales of accessories was primarily attributable to increased sales of thermal paper used for printing digital waybills.
Total operating expenses at this China-based company soared 49.7% to RMB 499.7 million. Higher selling, general and administrative (SG&A) expenses induced a rise in operating expenses. Apart from other factors, rise in salary and accrued bonus escalated SG&A expenses during the reported period. Gross margin contracted to 27.5% in the first quarter compared with 29.1% a year ago. This downside was due to expansion in parcel volumes and cost productivity gain. During the quarter under review, ZTO Express repurchased 1.7 million ADSs at average price of $15.85 per ADS.
2019 Guidance Intact
The company reiterates its outlook for full-year parcel volumes and adjusted net income. Parcel volumes are anticipated in the range of 11.51-11.93 billion for the current year, representing a year-over-year improvement of 35-40%. Additionally, adjusted net income is predicted in the band of RMB4.8-RMB5.2 billion, indicating an ascent of 14.3-23.8%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
At this time, ZTO Express (Cayman) Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
ZTO Express (Cayman) Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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