Back to top

Image: Bigstock

ZTO Express (ZTO) Gains on Solid Cash Balance & Parcel Volume

Read MoreHide Full Article

We have recently updated a report on ZTO Express (Cayman) Inc. (ZTO - Free Report) .  

The long-term expected earnings per share (three to five years) growth rate for ZTO Express is pegged at 18.2%.  

Strong performance in the core express delivery services unit is encouraging. Revenues from the unit increased 29.2% year over year in the first nine months of 2021, owing to an increase in parcel volumes. With the rapid growth in the e-commerce business, ZTO Express registered recent growth in parcel volume. The company anticipates parcel volumes in the range of 22.2-22.7 billion in 2021, indicating a rise of 30.6-33.5% year over year.

ZTO exited the third quarter with cash and cash equivalents of RMB 10.36 billion, higher than its short-term bank borrowings of $4.43 billion. This implies that the company has enough cash to pay off its short-term debt obligations.

Despite the above-mentioned tailwinds, high selling, general and administrative (SG&A) expenses might stoke operating expenses and hurt the bottom line.  

Zacks Rank & Other Stocks to Consider

ZTO Express currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors interested in the broader Zacks Transportation sector can also consider stocks like J.B. Hunt Transport Services (JBHT - Free Report) , FedEx Corporation (FDX - Free Report) and Schneider National (SNDR - Free Report) .

The long-term expected earnings per share (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all its segments. The Dedicated Contract Services (DCS) unit is being aided by fleet-productivity improvement and a rise in average revenue-producing trucks. The Integrated Capacity Solutions (ICS) unit is gaining from a favorable customer freight mix as well as higher contractual and spot rates.

JBHT’s measures to reward shareholders are encouraging. Driven by the tailwinds, the stock has increased 35.3% in the past year. J.B. Hunt currently carries a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for FedEx is pegged at 12%. FDX is benefitting from a surge in e-commerce demand amid the pandemic.

FDX exited first-quarter fiscal 2022 with cash and equivalents of $6,853 million, higher than its current debt of $125 million. Driven by the tailwinds, the stock has moved up 7.4% in the past year. FedEx currently carries a Zacks Rank #2.

The long-term expected earnings per share (three to five years) growth rate for Schneider is pegged at 17.9%. SNDR benefits from strong performance in the Intermodal and Logistics units.

SNDR’s third-quarter cash balance is also encouraging. Driven by the tailwinds, the stock has moved up 18.3% in the past year. Schneider currently carries a Zacks Rank #2.