A month has gone by since the last earnings report for ZTO Express (Cayman) Inc. (ZTO Quick QuoteZTO - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ZTO Express (Cayman) Inc. due for a pullback? 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 Q4 Earnings Beat Estimates

ZTO Express’ fourth-quarter 2022 earnings (excluding 1 cent from non-recurring items) of 37 cents per share beat the Zacks Consensus Estimate of 35 cents. The bottom line increased 8.8% year over year despite higher operating expenses.

Total revenues of $1,431.2 million also beat the Zacks Consensus Estimate of $1,340.9 million but decreased 1.1% year over year, despite the increase in parcel volumes.

Revenues in Express delivery services increased 8.8% year over year. The uptick was driven by an increase of 3.9% in parcel volume and 4.7% in parcel unit price. Market share of  parcel volume improved 1.5 points to 22.1% in 2022.

Freight forwarding services’ revenues declined 32.8% year over year. However, cross-border e-commerce demand and pricing are returning to normal following COVID-19 recovery. Revenues from sales of accessories climbed 14.8% year over year.

Total operating expenses of this China-based company increased almost 6% year over year. Selling, general and administrative expenses increased 18.8% on the back of a rise in employees' compensation and benefits. Gross margin rate improved to 28.1 % from 24.4 % in the year-ago period.

ZTO Express exited 2022 with cash and cash equivalents of RMB 11.69 billion compared with RMB 9.72 billion at the end of 2021. As of Dec 31, 2022, ZTO purchased an aggregate of 36,560,249 ADSs at an average price of US$25.20, including repurchase commissions.

ZTO Express’ management expects parcel volumes in 2023 to be in the 28.78 - 29.75 billion range, implying growth of 18-22% year over year. Management anticipates to achieve an increase in its market share of at least 1.5 percentage point for 2023.

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.

The consensus estimate has shifted -5.56% due to these changes.

VGM Scores

At this time, ZTO Express (Cayman) Inc. has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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.