Back to top

Image: Bigstock

ZTO Express (Cayman) Inc. (ZTO) Down 2.4% Since Last Earnings Report: Can It Rebound?

Read MoreHide Full Article

A month has gone by since the last earnings report for ZTO Express (Cayman) Inc. (ZTO - Free Report) . Shares have lost about 2.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is ZTO Express (Cayman) Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

ZTO Express' Q3 Earnings Beat Estimates, Revenues Up Y/Y

ZTO Express'  third-quarter 2018 earnings of 20 cents per share beat the Zacks Consensus Estimate of 18 cents. Moreover, the bottom line improved significantly from the year-ago figure on the back of revenue growth.

The top line surged more than 34% year over year to $616.6 million (RMB4,234.6 million). This upside was driven by a 23.3% year-over-year increase in revenues from the company’s express delivery services unit.

Segmental revenues were boosted by a 36.5% improvement in parcel volume to 2,096 million. Freight forwarding services (acquired during the fourth quarter of 2017) contributed 6.9% to the top line. The 31.3% rise in revenues from sales of accessories was primarily attributable to increased sales of thermal paper used for printing digital waybills.

Total operating expenses at this China-based company were up 21% to RMB233.6 million. Higher selling, general and administrative (SG&A) expenses induced a rise in operating expenses. Apart from other factors, higher salary and accrued bonus caused a rise in SG&A expenses during the reported period.

Q4 Outlook

For the fourth quarter, ZTO Express anticipates parcel volume between 2,620 million and 2,660 million, reflecting a year-over-year increase in the 30-32% range. Adjusted net income is expected between RMB1.2 billion and RMB1.3 billion, mirroring a year-over-year improvement in the 13.4-22.8% band.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, ZTO Express (Cayman) Inc. has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

ZTO Express (Cayman) Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


ZTO Express (Cayman) Inc. (ZTO) - free report >>

Published in