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ZTO Express (ZTO) Shares Decline Despite Q3 Earnings Beat

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ZTO Express Inc.’s (ZTO - Free Report) third-quarter 2020 earnings of 23 cents per share (RMB 1.53) beat the Zacks Consensus Estimate by a penny. However, the bottom line declined year over year due to 18.4% decrease in parcel unit price as a result of intense competition. This year-over-year drop in earnings, despite significant rise in parcel volume, might have weighed on investor sentiments, causing shares of the company to slip more than 5% in after-hours trading on Nov 18.

Total revenues of $977.8 million (RMB 6,638.8 million) increased in double digits year over year owing to significant rise in revenues at the core express delivery services unit (accounted for 87.1% of the top line).

ZTO Express Cayman Inc. Price, Consensus and EPS Surprise

ZTO Express Cayman Inc. Price, Consensus and EPS Surprise

ZTO Express Cayman Inc. price-consensus-eps-surprise-chart | ZTO Express Cayman Inc. Quote

Detailed Operational Statistics

Revenues in Express delivery services surged 23.4% year over year, due to 51.2% jump in parcel volume. Parcel volume market share increased by 1.9 percentage points to 20.8%. Freight forwarding services revenues augmented 75.4% year over year owing to increase in cross-border e-commerce demand amid coronavirus concerns. Also, revenues from sales of accessories increased 8.1% year over year due to higher usage of lower-priced single-sheet digital waybill since the second half of 2019.

Meanwhile, total operating expenses of this China-based company climbed 12.9% to RMB 221.83 million. Selling, general and administrative expenses soared 28.4% year over year with increases in salaries and accrued bonuses as well as depreciation and amortization expenses. Gross margin deteriorated to 21% in the third quarter from 30.3% in the year-ago quarter. As of Sep 30, 2020, ZTO Express repurchased 7.7 million ADSs at average price of $17.33.

Liquidity

ZTO Express, carrying a Zacks Rank #5 (Strong Sell), exited the third quarter with cash and cash equivalents of RMB 16.41 billion compared with   RMB 5.27 billion at the end of 2019.

Outlook

ZTO Express maintains its guidance for parcel volumes and adjusted net income in 2020. Parcel volumes are still expected in the range of 16.2-17 billion, indicating a rise of 33.7-40.3% from the year-ago period.  Additionally, adjusted net income is anticipated between RMB 4.8 billion and RMB 5.2 billion, implying a 1.7-9.3% fall year over year.

Sectorial Snapshot

Let’s take a look into some other Zacks Transportation sector companies’ third-quarter results.

Expeditors International of Washington (EXPD - Free Report) , carrying a Zacks Rank #2 (Buy), reported third-quarter 2020 earnings of $1.12 per share, surpassing the Zacks Consensus Estimate of 98 cents. Total revenues of $2,464.8 million also beat the Zacks Consensus Estimate of $2,315.1 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gol Linhas Aereas Inteligentes SA (GOL - Free Report) , carrying a Zacks Rank #4 (Sell), incurred a loss (excluding 89 cents from non-recurring items) of 91 cents per share in the third quarter of 2020, wider than the Zacks Consensus Estimate of a loss of 80 cents. Net operating revenues of $181.4 million also missed the Zacks Consensus Estimate of $188 million.

Schneider National Inc (SNDR - Free Report) , carrying a Zacks Rank #3 (Hold), reported third-quarter earnings (excluding 6 cents from non-recurring items) of 31 cents per share, matching the Zacks Consensus Estimate. Operating revenues of $1,135.7 million surpassed the Zacks Consensus Estimate of $1,122.1 million.

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