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Expeditors Rallies 19% in a Year: What is Driving the Stock?

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Shares of Expeditors International of Washington, Inc. (EXPD - Free Report) have fared well in a year’s time. The stock has gained 18.6%, against the industry’s decline of 9.8%.

Reasons for Impressive Price Performance

The Seattle, WA-based company has an impressive record with respect to earnings per share (EPS). It beat estimates in each of the trailing four quarters, the average being 12.2%.

The company posted earnings beat earlier this month, when it announced third-quarter 2018 results.

Quarterly EPS of 92 cents surpassed the Zacks Consensus Estimate by 14 cents and rallied more than 39% year over year. Results were aided by a lower effective tax rate. Effective tax rate in the reported quarter was 21.8% compared with 36.7% in the year-ago quarter. Revenues of $2.09 billion outpaced the consensus mark of $2.03 billion.  Also, the top line improved 16% on a year-over-year basis. In fact, the company is anticipated to perform well in the final quarter of 2018 on the back of higher revenues in key divisions and lower tax rate.

Further, we are impressed by Expeditors' efforts to reward shareholders in the form of dividend payments and share buybacks. During the first nine months of 2018, the company repurchased 7.8 million shares at an average price of $71.58 per share. Moreover, in May 2018, the company announced 7.1% hike in semi-annual cash dividend to 45 cents per share (annualized 90 cents per share).

Moreover, the company’s trailing 12-month return on equity (ROE) supports growth potential. Not only has the company’s ROE of 29% displayed an upward trend in the past year, it compares favorably with industry ROE of 16.6% and the S&P 500 index’s 18.1%. This reflects the fact that the company is efficient in using shareholders’ funds.

Additionally, we are encouraged by Expeditors’ sound balance sheet. The company’s asset-light business model allows it to maintain a debt-free balance sheet.

Bullish Readings & Zacks Rank

The positivity revolving around the stock can be gauged from the Zacks Consensus Estimate being revised 1.2% upward in the past 30 days for current-quarter earnings.

The company’s impressive Momentum Score of B further highlights short-term attractiveness.

Considering these positives, we believe that Expeditors should be added by investors to their portfolios. The Zacks Rank #2 (Buy) carried by the stock seems to suggest the same.

Other Stocks to Consider

Investors interested in the Zacks Transportation sector may consider CSX Corporation (CSX - Free Report) , Frontline Ltd. (FRO - Free Report) and Spirit Airlines, Inc. (SAVE - Free Report) , each sporting a  Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of CSX Corporation, Frontline and Spirit Airlines have gained 10.8%, 41.8% and 69.8% in the past six months, respectively.

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