Expeditors International of Washington Inc. EXPD is slated to report its second quarter 2015 earnings results on Aug 4, 2015, before the opening bell.
Last quarter, Expeditors reported a positive earnings surprise of 14.58%. The company has an impressive track record with respect to earnings, having surpassed the Zacks Consensus Estimate in three of the last four quarters. The trailing four-quarter average earnings beat is 6.17%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Expeditors is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP for the company stands at +1.89%, as the Most Accurate estimate is 54 cents while the Zacks Consensus Estimate is pegged at 53 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Expeditors currently carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Expeditors’ Zacks Rank #3 and +1.89% ESP makes us reasonably confident of an earnings beat.
What's Driving the Better-than-Expected Earnings?
Expeditors performed impressively in the first quarter of 2015 reporting higher-than-expected revenues as well as earnings. We expect Expeditors to report impressive revenues in the second quarter as well.
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.
Moreover, the bottom line is likely to gain from share repurchases in the quarter. We are impressed by the company’s move to reward shareholders through dividends.
Other Stocks to Consider
Here are some other companies in the transportation sector that investors may consider instead, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Air Lease Corp AL carries a Zacks Rank #3 and has an earnings ESP of +2.99%.
Nordic American Tankers NAT carries a Zacks Rank #1 and has an earnings ESP of +2.86%.
Dryships DRYS carries a Zacks Rank #3 and has an earnings ESP of +14.29%.
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