On Jan 21, 2015, we issued an updated research report on Expeditors International of Washington Inc. (EXPD).
The company performed impressively in the third quarter of 2014 reporting higher-than-expected earnings and revenues. The company reported adjusted earnings of 53 cents per share, beating the Zacks Consensus Estimate of 49 cents. Earnings improved 18% year over year. Total revenue rose 11% to $1.71 billion, handily beating the Zacks Consensus Estimate of $1.65 billion driven by double-digit growth in air and ocean freight volumes. We believe continued strength in the airfreight business owing to growing trade between the U.S. and China places the company favorably in the freight forwarding and customer brokerage business. Furthermore, Expeditors’ growing supply chains and cost-control measures should support revenue and margin expansion going forward.
Expeditors acts either as a freight consolidator, or as an agent for the airline carrying the shipment. Strong airfreight demand should help Expeditors in the future. We are encouraged by Expeditors’ sound balance sheet. The company’s asset-light business model allows it to maintain a debt-free balance sheet. Expeditors had cash balance of around $990.5 million at the end of the third quarter.
We are impressed by the company’s efforts to reward shareholders in the form of dividend payments and share repurchases. Following a 12% dividend hike in 2012 to an annual dividend of 56 cents per share, the company once again increased its dividend by 7% in 2013 to an annual payment of 60 cents per share. In 2014, Expeditors once again hiked its dividend by 6.67% to 64 cents. Given solid financials, we expect the company to consistently repurchase shares and raise its dividend in the future. Nevertheless, we remain cautious about competition in the logistics space.
Other players in the same industry are CH Robinson Worldwide Inc. (CHRW), Matson, Inc. (MATX) and XPO Logistics, Inc. (XPO).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment