Here's Why Investors Should Retain Expeditors Stock Now
Expeditors’ EXPD robust liquidity position is boosting the company’s financial stability. The shareholder-friendly approach also bodes well for the company. However, EXPD is grappling with increased operating expenses, hurting the company’s bottom line.
Factors Favoring EXPD
Expeditors’ commitment to rewarding its shareholders through dividends and buybacks is encouraging. The company has returned $205 million to shareholders in stock repurchases and dividends during the second quarter of 2024. These initiatives not only bolster investor confidence but also positively impact the company’s bottom line.
EXPD’s financial stability is boosted by its robust liquidity. The company exited the second quarter of 2024 with a current ratio (a measure of liquidity) of 1.71. A current ratio of greater than 1 is always desirable as it indicates that the company has sufficient cash to meet its short-term debt obligations.
Owing to such tailwinds, shares of EXPD have risen 10.6% in the past year compared with its industry’s decline of 1% in the same period.
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Expeditors: Key Risks to Watch
The surge in operating expenses is adversely impacting the company’s bottom line, driven by increased aircraft services. In the second quarter of 2024, operating expenses surged by 11.2% year over year to $2.22 billion.
Aircraft services, which represent 29% of total operating costs, increased by 23% year over year. The ocean freight and ocean services expenses jumped by 17.8% year over year, pushing up the total operating costs.
Expeditors is grappling with declining airfreight and ocean container volumes, which reflect weakened demand and falling rates. Management believes that in the current inflation-induced high-interest-rate environment, shippers face uncertain demand for their products as consumers remain cautious due to reduced purchasing power.
EXPD’s Zacks Rank
Expeditorscurrently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide CHRW and Westinghouse Air Brake Technologies WAB.
C.H. Robinson Worldwide currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. CHRW has an expected earnings growth rate of 25.2% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 27.2% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present andhas an expected earnings growth rate of 26% for the current year.
The company has an encouraging track record concerning the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average beat is 11.8%. Shares of WAB have climbed 68.1% in the past year.
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C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report