Expeditors International of Washington Inc.’s EXPD third-quarter 2015 earnings of 62 cents per share beat the Zacks Consensus Estimate by 3 cents. Earnings improved 17% on a year-over-year basis.
Total revenue of $1.65 billion fell short of the Zacks Consensus Estimate of $1.81 billion. Revenues declined 3% from the year-ago figure. Soft air freight and ocean freight revenues hurt the top line in the third quarter.
Gross profit (net revenue) increased 11% year over year in the third quarter to $570 million. Gross margin (yield) improved to 34.5% in the reported quarter. Expeditors exited the third quarter with cash and cash equivalents of $968.7 million as compared with $927.1 million at the end of 2014.
Segmental Revenues
Airfreight Services revenues declined 3.9% year over year to $659.6 million in the third quarter. Ocean Freight and Ocean Services revenues decreased 6.7% year over year to $560 million. Customs Brokerage and Other Services revenues rose 3.2% year over year to approximately $431.75 million.
Our Take
We are pleased by Expeditors’ earnings outperformance in third-quarter 2015, which marks the fifth successive quarterly earnings beat at the company. Even though the company’s top line show is a tad disappointing, we believe continued strength in the airfreight business, led by growing trade between the U.S. and China, places the company favorably in the freight forwarding and customer brokerage business. Furthermore, the company’s growing supply chain and cost-control measures should support revenue and margin expansion, going forward.
Zacks Rank
Currently, Expeditors has a Zacks Rank #3 (Hold). Better-ranked stocks in the transportation sector include Virgin America VA, DHT Holdings, Inc. DHT and Matson, Inc. MATX. All the three stocks carry a Zacks Rank #2 (Buy).
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