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Here's Why You Should Retain Expeditors (EXPD) Stock Now

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Expeditors International of Washington’s (EXPD - Free Report) shareholder-friendly initiatives and strong liquidity bode well. The transportation company, however, grapples with declining volumes and high capex-related challenges.

Factors Favoring EXPD

Expeditors is making constant efforts to boost the value of its shareholders. Management announced a 3% increase in its semi-annual cash dividend in May 2023. EXPD had hiked its semi-annual cash dividend in 2022 as well. The company is also active on the share buyback front.

EXPD is cutting costs in a bid to counter the soft demand scenario. Management noted that compensation, its largest and most variable expense, came down significantly in 2023 on a year-over-year basis. Emphasizing financial robustness, Expeditors’ current ratio (a measure of liquidity) was an impressive 2.02 at the end of 2023.

We are also optimistic about the company’s buyout of Fleet Logistics’ Digital Platform. The acquisition has boosted Expeditors’ online less-than-truckload shipping platform, Koho. 

Key Risks

Expeditors grapples with declining airfreight and ocean container volumes, reflecting weakened demand and falling rates. Management believes that in this inflation-induced high-interest-rate scenario, shippers face uncertain demand for its products, as consumers remain cautious due to reduced purchasing power.

High capital expenditures in this era of weak demand are a worry. Capital expenditure for 2022 was $86.8 million, much higher than the $36.2 million reported in 2021. Despite the weak demand environment, capex was $39.3 million in 2023, higher than the 2021 reading.

Price Performance

In the past six months, EXPD shares have lost 5.3% compared with its industry’s 4.7% decline.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Key Picks

EXPD currently carries a Zacks Rank #3 (Hold). Some top-ranked stocks from the Zacks Transportation sector are C.H. Robinson Worldwide (CHRW - Free Report) and Wabtec Corporation (WAB - Free Report) . While C.H. Robinson sports a Zacks Rank #1 (Strong Buy), WAB presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CHRW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 7.33%.

CHRW has an expected earnings growth rate of 22.42% for 2024. The Zacks Consensus Estimate for CHRW 2024 earnings has been revised 11.3% upward in the past 90 days. Shares of CHRW have gained 13.8% so far this year.

WAB has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 11.83%.

The Zacks Consensus Estimate for WAB’s 2024 earnings has been revised 3.3% upward in the past 90 days. WAB has an expected earnings growth rate of 25.34% for 2024. Shares of WAB have gained 23.5% so far this year.

 


 

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