ZTO Express Down 14% In 3 Months: What Led To The Drop?
Zacks Investment Research | Nov 19, 2018 07:47AM ET
Shares of ZTO Express (Cayman) Inc. (NYSE:ZTO) have lost 14.8% in the past three months due to multiple headwinds.
Reasons for Dismal Performance
High operating expenses have persistently put pressure on the bottom line for quite some time. In third-quarter 2018 results, total operating expenses of this China-based company were up 21% to RMB233.6 million.
Moreover, ZTO Express’ investments toward the expansion of its portfolio will increase costs, which are likely to weigh on the bottom line moving ahead.
Furthermore, stringent government regulations and strict policies of the Chinese market are a major hindrance to ZTO Express’ business. Also, the domestic express delivery market is highly competitive due to the presence of big players like SF Express and STO Express. Given this backdrop, the stock might be adversely impacted if competition persists.
Additionally, the stock’s valuation is not attractive. The company’s trailing 12-month price-to-earnings ratio of 21 compares unfavorably with the Zacks Investment Research
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