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Here's Why Investors Should Avoid ZTO Express (ZTO) Stock Now
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ZTO Express Cayman Inc.’s (ZTO - Free Report) financial stability is challenged by escalated operating expenses. Elevated labor costs are further putting a strain on the company’s bottom line, thereby making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Weak Zacks Rank: ZTO currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: ZTO Express’ shares have plunged 15.6% in the past year compared with its industry’s 7.8% decline.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which ZTO belongs currently has a Zacks Industry Rank of 152 (out of 251). Such an unfavorable rank places it in the bottom 39% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
High Costs Represent a Major Headwind: The northward movement in operating expenses is hurting ZTO Express’bottom line, challenging its financial stability. For example, in the second quarter of 2024, total operating expenses rose 5% year over year. The surge in operating expenses was primarily caused by an increase in labor costs.
In the second quarter of 2024, labor costs, including compensation and benefit expenses, rose 17.5% year over year, amounting to $683.7 million.
General supplies and expenses jumped 15% year over year, amounting to$81.6 million. Interest Expenses moved up to $15.94 million year over year.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
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 9.4% in the past year.
WAB holds a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 11.8%. Shares of WAB have climbed 48.2% in the past year.
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Here's Why Investors Should Avoid ZTO Express (ZTO) Stock Now
ZTO Express Cayman Inc.’s (ZTO - Free Report) financial stability is challenged by escalated operating expenses. Elevated labor costs are further putting a strain on the company’s bottom line, thereby making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Weak Zacks Rank: ZTO currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: ZTO Express’ shares have plunged 15.6% in the past year compared with its industry’s 7.8% decline.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which ZTO belongs currently has a Zacks Industry Rank of 152 (out of 251). Such an unfavorable rank places it in the bottom 39% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
High Costs Represent a Major Headwind: The northward movement in operating expenses is hurting ZTO Express’bottom line, challenging its financial stability. For example, in the second quarter of 2024, total operating expenses rose 5% year over year. The surge in operating expenses was primarily caused by an increase in labor costs.
In the second quarter of 2024, labor costs, including compensation and benefit expenses, rose 17.5% year over year, amounting to $683.7 million.
General supplies and expenses jumped 15% year over year, amounting to$81.6 million. Interest Expenses moved up to $15.94 million year over year.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
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 9.4% in the past year.
WAB holds a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 11.8%. Shares of WAB have climbed 48.2% in the past year.