Expeditors (EXPD) Q2 Earnings: Is a Beat in the Offing?

Shutterstock photo

Expeditors International of Washington, Inc.  EXPD is slated to report second-quarter 2018 results on Aug 7.

In the first quarter of 2018, the company delivered a positive earnings surprise of 18.8%. Expeditors also surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, with an average beat of approximately 9.9%.

Also, the stock's impressive earnings history is well reflected in its price performance. In a year's time, Expeditors has rallied 28.7% compared with its  industry 's 2.4% increase.

Factors Likely at Play

We expect Expeditors ' second-quarter results to be aided by the improving airfreight demand scenario. Additionally, volume growth in the ocean and airfreight divisions is likely to boost results in the soon-to-be-reported quarter. This apart, robust global trade should prove conducive to Expeditors as it derives bulk of revenues from international markets.

Meanwhile, lower tax rates, following introduction of the new tax law (Tax Cuts and Jobs Act), are boosting bottom-line growth and should continue to do so in the second as well. Moreover, the company's initiatives to reward are commendable. In May 2018, Expeditors raised its semi-annual cash dividend by 7.1% to 45 cents per share (annualized 90 cents per share).

In the wake of the new tax law, we expect a further uptick in such investor-friendly activities. Huge savings from the slashed tax rate has boosted Expeditors' cash flow. The company's ability to generate more free cash flow is favorable as far as further dividend hikes are concerned.

However, the bottom line might be under pressure due to high operating expenses in the second quarter.

What Does the Zacks Model Unveil?

Our proven model shows that Expeditors is likely to beat on earnings in the second quarter. This is because the stock has the right combination of the two key ingredients - a positive  Earnings ESP  and a Zacks Rank #3 (Hold) or better - to increase its odds of an earnings surprise.

Earnings ESP:  Expeditors has an Earnings ESP of +1.54% as the Most Accurate Estimate of 79 cents is a penny higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they're reported with our  Earnings ESP Filter .

Zacks Rank:  Expeditors carries a Zacks Rank #2 (Buy), which when combined with a positive ESP makes us confident of an earnings beat.

Conversely, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Expeditors International of Washington, Inc. Price and EPS Surprise

Expeditors International of Washington, Inc. Price and EPS Surprise | Expeditors International of Washington, Inc. Quote

Other Stocks to Consider

Investors interested in the broader  Transportation sector  may check out a few stocks from the same space like Star Bulk Carriers Corp. SBLK , Fly Leasing Limited FLY and Frontline Ltd. FRO as these too possess the right combination of elements to beat estimates in their next releases.

Star Bulk Carriers has an Earnings ESP of +19.44% and a Zacks Rank #1 (Strong Buy). The company will report second-quarter earnings on Aug 7. You can see  the complete list of today's Zacks #1 Rank stocks here .

Fly Leasing Limited has an Earnings ESP of +1.35% and a Zacks Rank of 3. The company will report second-quarter earnings on Aug 23.

Frontline has an Earnings ESP of +10.59% and a Zacks Rank #3. The company will report second-quarter earnings on Aug 31.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think

See This Ticker Free >>

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

Fly Leasing Limited (FLY): Free Stock Analysis Report

Star Bulk Carriers Corp. (SBLK): Free Stock Analysis Report

Frontline Ltd. (FRO): Free Stock Analysis Report

Expeditors International of Washington, Inc. (EXPD): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: FLY , SBLK , FRO , EXPD

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?