ZTO Express (Cayman) Inc.’s ZTO 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.
The earnings lag perhaps disappointed investors. Consequently, shares of the company declined more than 3% in after-hours trading on May 15.
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.
ZTO Express (Cayman) Inc. Price, Consensus and EPS Surprise
ZTO Express (Cayman) Inc. price-consensus-eps-surprise-chart | ZTO Express (Cayman) Inc. Quote
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%.
Zacks Rank & Key Picks
ZTO Express carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Hertz Global Holdings, Inc HTZ, Hub Group, Inc. HUBG and SkyWest, Inc. SKYW. While SkyWest sports a Zacks Rank #1 (Strong Buy), Hertz Global and Hub Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Hertz Global, Hub Group and SkyWest have rallied more than 28%, 14% and 32%, respectively, on a year-to-date basis.
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