Expeditors International of Washington Inc. (EXPD) is scheduled to report its third-quarter 2014 financial numbers on Nov 4.
Last quarter, Expeditors had delivered a negative earnings surprise of 2.13% – the third earnings miss for the company in the last four quarters. On the other hand, total revenue in the second quarter rose 6% year over year to $1.6 billion, in line with the Zacks Consensus Estimate.
Steady air and ocean freight volumes along with a good show in the customs brokerage business benefited the company in the quarter. Let’s see how things are shaping up for this announcement.
Factors at Play
We expect Expeditors to report impressive revenues in the third quarter of 2014. 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. Further, Expeditors’ growing supply chains and cost-control measures should support revenue and margin expansion.
Nevertheless, we remain cautious with regard to competitive threats from other logistic companies like CH Robinson Worldwide Inc. (CHRW). Weak consumer and business demand as well as higher freight rates charged by third party carriers might also hurt the company’s revenues. Moreover, with its operations spread across the globe, Expeditors faces the risk of adverse foreign currency movements that may impact its top line.
Earnings Whispers?
Our proven model does not conclusively show that Expeditors is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here, as elaborated below.
Zacks ESP: Earnings ESP for Expeditors is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 49 cents per share.
Zacks Rank: Expeditors carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider instead, as our model shows these have the right combination of elements to post an earnings beat this quarter:
Radiant Logistics, Inc. (RLGT) has an earnings ESP of +50.00% and carries a Zacks Rank #2 (Buy). The company is expected to release its first-quarter fiscal 2015 results on Nov 12.
Atlas Air Worldwide Holdings, Inc. (AAWW) has an earnings ESP of +4.65% and also carries a Zacks Rank #2. The company is scheduled to report its third-quarter financial numbers on Nov 6.
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