ZTO Express (ZTO) Benefits From Parcel Volumes, Expenses Ail
ZTO ExpressZTO is benefiting from strength across its core express delivery services unit. ZTO’s shareholder-friendly initiatives also look encouraging. Notably, shares of ZTO Express have gained 6.8% in the past year compared with a 0.7% rise of the industry it belongs to.
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How is ZTO Express Doing?
ZTO Express is benefiting from the strong performance of the core express delivery services unit. Notably, revenues from the unit jumped 14.1% year over year in second-quarter 2023. The uptick was driven by a 23.8% increase in parcel volume and a 7.8% decrease in parcel unit price. Parcel volume market share increased to 23.4% in the reported quarter. ZTO Express continues to expect 2023 parcel volume in the range of 29.27-30.24 billion.
We are also impressed with ZTO Express’ efforts to reward its shareholders. As of Jun 30, 2023, ZTO Express purchased 38,473,231 ADSs at an average purchase price of $25.18, including repurchase commissions. The company’s board of directors has further approved changes to its existing share repurchase program, increasing the value of shares to be repurchased from $1 billion to $1.5 billion and extending the effective time by one year through Jun 30, 2024.
On the flip side,rising selling general & administrative (SG&A) expenses might push up operating expenses and affect the bottom line. Apart from other factors, increases in compensation, benefits and office expenditures are leading to higher SG&A expenses. In second-quarter 2023, SG&A expenses increased 10.4% on the back of the rise in employees' compensation and benefits.
Zacks Rank and Stocks to Consider
Currently, ZTO Express carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Transportation sector are Ryder System, Inc. R, Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation (WAB) and SkyWest, Inc. (SKYW). Each of these companies presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for R’s current-year earnings has improved 8.1% over the past 90 days. Shares of R have gained 20.5% year to date. R delivered a trailing four-quarter earnings surprise of 11.20%, on average.
Wabtec has an expected earnings growth rate of 16.87% for the current year. WAB delivered a trailing four-quarter earnings surprise of 3.42%, on average.
The Zacks Consensus Estimate for WAB’s current-year earnings has improved 4.9% over the past 90 days. Shares of WAB have gained 5.9% year to date.
SkyWest's fleet-modernization efforts are commendable.A fall in operating expenses is a tailwind for SkyWest. In second-quarter 2023, the metric dipped 2.4% to $693.8 million due to a decline in operating costs. Low operating expenses boost bottom-line results. Shares of SKYW have surged 163.6% year to date.
SKYW delivered a trailing four-quarter earnings surprise of 31.51%, on average.
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