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ZTO Express (ZTO) Q3 Earnings Top, Revenues Increase Y/Y

ZTO Express’ ZTO third-quarter 2022 earnings of 33 cents per share beat the Zacks Consensus Estimate of 26 cents. The bottom line surged year over year despite higher operating expenses and the impact of Omicron-induced woes.

Total revenues of $1,257.5 million improved year over year, owing to a rise in revenues at the express delivery services unit (contributing 90.6% to the top line).

ZTO Express Cayman Inc. Price, Consensus and EPS Surprise

ZTO Express Cayman Inc. Price, Consensus and EPS Surprise
ZTO Express Cayman Inc. Price, Consensus and EPS Surprise

ZTO Express Cayman Inc. price-consensus-eps-surprise-chart | ZTO Express Cayman Inc. Quote

Detailed Operational Statistics

Revenues in Express delivery services jumped 22.7% year over year due to an 11.7% increase in parcel volume and a 9.9% increase in parcel unit price. Parcel volume market share grew by 1.3 points to 22.1% in the reported quarter.

Freight forwarding services’ revenues declined 13.7% year over year, with cross-border e-commerce demand and pricing declining owing to the weak economy and COVID recurrences.

Revenue from sales of accessories climbed 14.3% year over year.

The total operating expenses of this China-based company came in at RMB 269.6 million compared with RMB 207.8 million in the year-ago quarter. Selling, general and administrative expenses increased 13.4% on the back of the rise in employees' compensation and benefits.

The gross margin rate improved to 27.3 % from 21.2 % in the year-ago period.

Liquidity & Buyback

ZTO Express exited the third quarter of 2022 with cash and cash equivalents of RMB14.59 billion compared with RMB9.93 billion at the end of June 2022.

As of Sep 30, 2022, ZTO Express repurchased 36,074,242 ADSs at an average purchase price of $25.21. 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. The company anticipates funding the repurchases from its existing cash balance.

2022 View

ZTO Express has updated its expectation for parcel volumes in 2022 to 24.30-24.74 billion (prior view: 24.96-25.86 billion). The updated guidance represents an increase of 9-11% year over year.

Currently, ZTO Express carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Transportation Companies

Delta AirLines’ DAL third-quarter 2022 earnings (excluding 42 cents from non-recurring items) of $1.51 per share fell short of the Zacks Consensus Estimate of $1.56. Escalated operating expenses induced the earnings miss. Multiple flight cancelations and booking weaknesses due to Hurricane Ian also hurt results. DAL reported earnings of 30 cents per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant then.

DAL reported revenues of $13,975 million, which lagged the Zacks Consensus Estimate of $14,157.2 million. Driven by the high air-travel demand, total revenues increased more than 52% on a year-over-year basis.

United Airlines’ UAL third-quarter 2022 earnings (excluding 5 cents from non-recurring items) of $2.81 per share beat the Zacks Consensus Estimate of $2.21 and our estimate of $2.17. An upbeat in air-travel demand aided results. In the year-ago quarter, UAL incurred a loss of $1.02 per share when air-travel demand was not as buoyant as in the current scenario. The third quarter of 2022 was the second consecutive profitable quarter at UAL since the onset of the pandemic.

UAL’s operating revenues of $12,877 million beat the Zacks Consensus Estimate of $12,709.5 million and our estimate of $12, 631.6 million. UAL’s revenues increased more than 66% year over year owing to an upbeat in air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.2% from third-quarter 2019 (pre-coronavirus) levels.

J.B. Hunt Transport Services, Inc. JBHT reported better-than-expected third-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.JBHT’squarterly earnings of $2.57 per share surpassed the Zacks Consensus Estimate of $2.45 and improved 36.7% year over year.

JBHT’s operating revenues of $3,838.3 million also outperformed the Zacks Consensus Estimate of $3803.4 million. The top line jumped 22.1% year over year on the back of strength across — Dedicated Contract Services, Intermodal, Truckload and Final Mile Services segments. Total operating revenues, excluding fuel surcharges, rose 12.4% year over year.

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