Back to top

Image: Bigstock

Expeditors (EXPD) Stock Gains 19% Year to Date: Here's Why

Read MoreHide Full Article

Shares of Expeditors International of Washington, Inc.  (EXPD - Free Report) have rallied 18.6% so far this year, handily outperforming the industry’s 7.6% rise.

YTD Price Performance

 

 

Reasons Behind the Rally

Expeditors is benefiting from solid yield growth as freight markets remain promising. In fact, the improving freight demand scenario bodes well for the company. Impressive volume growth in the ocean and airfreight divisions is encouraging as well. Expeditors' debt-free balance sheet also raises optimism.

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 moving ahead. Moreover, the company’s initiatives to reward are commendable. To this end, 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.

We note that the the new tax law is a blessing for all transportation companies . Apart from Expeditors, transportation stocks like Southwest Airlines Co. (LUV - Free Report) , Canadian Pacific Railway Limited (CP - Free Report) and Triton International Limited also hiked their respective dividend payouts this year.

Estimate Revisions

Upward estimate revisions reflect optimism in a stock’s prospect. Expeditors scores impressively on this front too. Over the last 60 days, this Zacks Rank #1 (Strong Buy) company has witnessed the Zacks Consensus Estimate for current-quarter and year earnings being revised 13.3% and 8.7% upward, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

Additionally, Expeditors’ trailing 12-month return on equity (ROE) supports its growth potential. The company’s ROE of 24.8% compares favorably with industry’s tally of 17.2%. This reflects the fact that Expeditors is efficient in using shareholders’ funds.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Published in