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Expeditors International of Washington, Inc. (EXPD) - free report >>
Matson, Inc. (MATX) - free report >>
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Expeditors (EXPD) Gains on Q2 Earnings Beat, Revs Miss
Expeditors International of Washington Inc.’s (EXPD - Free Report) second-quarter 2016 earnings of 63 cents per share beat the Zacks Consensus Estimate by 4 cents. Earnings improved 3% on a year-over-year basis. The earnings beat pleased investors, driving the stock during early trading.
Total revenue of $1.47 billion fell short of the Zacks Consensus Estimate of $1.61 billion. Revenues also declined 13% from the year-ago figure. Soft air freight and ocean freight revenues hurt the top line in the second quarter.
Gross profit (net revenue) increased marginally year over year in the second quarter of 2016 to $553.1 million. Gross margin (yield) improved to 37.5% in the reported quarter. Expeditors exited the second quarter with cash and cash equivalents of $980.3 million as compared with $807.8 million at the end of 2015. During the quarter, the company repurchased 1.9 million shares at an average price of $49.47 per share.
Segmental Revenues
Airfreight Services revenues declined 16.1% year over year to $582.1 million in the second quarter. Ocean Freight and Ocean Services revenues decreased 19.4% year over year to $464.7 million. Customs Brokerage and Other Services revenues increased 1.7% year over year to approximately $428.4 million.
EXPEDITORS INTL Price, Consensus and EPS Surprise
EXPEDITORS INTL Price, Consensus and EPS Surprise | EXPEDITORS INTL Quote
Our Take
We are pleased with the earnings beat in the second quarter. The below-par revenue performance, however, raises concern. Meanwhile, we believe that the strength in the airfreight business, led by growing business volumes between the U.S. and China, places the company favorably in the freight forwarding and customer brokerage business. Furthermore, we are encouraged by the company’s efforts to reward shareholders through dividend payments and buybacks.
Zacks Rank & Key Picks
Currently, Expeditors has a Zacks Rank #3 (Hold). Better-ranked stocks in the transportation sector include Matson, Inc. (MATX - Free Report) , SkyWest Inc. (SKYW - Free Report) and Danaos Corp. (DAC - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).
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