Expeditors International of Washington Inc. EXPD is scheduled to report its first-quarter 2015 financial numbers on May 6.
In the last quarter, Expeditors had delivered a 4.08% positive earnings surprise – the second successive quarterly earnings beat for the company. Let’s see how things are shaping up ahead of this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Expeditors is likely to beat earnings estimates this quarter as it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP for Expeditors is currently pegged at +2.08%. This is because the Most Accurate estimate of 49 cents stands above the Zacks Consensus Estimate of 48 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Expeditors carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, we caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Expeditors’ Zacks Rank #3 and +2.08% ESP make us reasonably confident of an earnings beat at the company.
What's Driving the Better-than-Expected Earnings?
Expeditors performed impressively in the fourth quarter of 2014 reporting higher-than-expected revenues as well as earnings. We expect Expeditors to report impressive revenues in the first 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, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Diana Containerships Inc. DCIX carries a Zacks Rank #3 and has an earnings ESP of +100%. The company is scheduled to report its quarterly results on May 12.
Avolon Holdings AVOL carries a Zacks Rank #3 and has an earnings ESP of +6.25%. The company is scheduled to report its quarterly results on May 6.
Tsakos Energy Navigation Ltd. TNP carries a Zacks Rank #2 and has an earnings ESP of +8.82%. The company is expected to report its result on May 15.
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