Will Rising Costs Hurt Expeditors (EXPD) In Q4 Earnings?
Zacks Investment Research | Feb 15, 2018 09:31PM ET
Expeditors International of Washington, Inc. (NASDAQ:EXPD) is slated to report fourth-quarter 2017 results on Feb 20, before the market opens.
Last quarter, the company performed impressively posting better-than-expected earnings and revenues. The bottom line increased 12% on a year-over-year basis. Results were aided by higher revenues. The top line also increased 15% from the year-ago figure. Growth was witnessed across all major divisions of the company.
Let’s see, how things shape up for this announcement.
Factors Likely at Play
High operating expenses are likely to hurt Expeditors’ bottom line in the fourth quarter. In terms of enterprise value (EV) to EBITDA ratio, the stock appears overvalued compared with the market at large. The company has a trailing 12-month EV/EBITDA ratio of 13.5, ahead of the S&P 500 index's 10.7.
However, volume growth across the company’s primary divisions might buoy its earnings results in the to-be-reported quarter.
The company is anticipated to witness substantial growth across all its segments, boosting the quarterly top line in turn.
The company’s efforts to reward shareholders through dividends and share buybacks are also encouraging. An update on this is expected on fourth-quarter conference call. Expeditors might hike its dividend payout, particularly with the advent of the new tax law, which should aid the company significantly.
Its sound balance sheet is a further positive. The company’s asset-light business model allows it to maintain a debt-free, stable financial position.
What Does Our Model Say?
Our proven model does not conclusively show that Expeditors is likely to beat on earnings this quarter. This is because a stock needs to have both a positive .
Zacks ESP: Expeditors has an Earnings ESP of -2.62%, which acts as a spoiler as the company needs a positive ESP to be confident about an earnings surprise. Hence, this combination leaves surprise prediction inconclusive.
Conversely, we caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
Expeditors International of Washington, Inc. Price and EPS Surprise
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