It has been about a month since the last earnings report for ZTO Express (Cayman) Inc. (ZTO Quick QuoteZTO - Free Report) . Shares have lost about 3.7% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

ZTO Express Q1 Earnings Beat Estimates

ZTO Express’ first-quarter 2023 earnings of 34 cents per share beat the Zacks Consensus Estimate of 24 cents and improved year over year.

Total revenues of $1,308.1 million missed the Zacks Consensus Estimate of $1,379.3 million. However, the top line improved year over year, owing to a rise in revenues at the express delivery services unit (contributing 93.4% to the top line).

Detailed Operational Statistics

Revenues in Express delivery services jumped 16.1% year over year due to a 20.5% increase in parcel volume. Parcel volume market share grew by 1.8 points to 23.4% in the reported quarter.

Freight forwarding services’ revenues declined 41.8% year over year, with cross-border e-commerce demand and pricing declining due to the weak global economy.  

Revenues from sales of accessories (largely consisting of sales of thermal paper used for digital waybills' printing) climbed 30.8%, in line with parcel volume growth. Other revenues were derived mainly from financing services.

Total operating expenses of this China-based company were RMB 573.0 million compared with RMB 503.2 million in the year-ago quarter. Selling, general and administrative expenses increased 27.2% on the back of the rise in employees' compensation and benefits.

The gross margin rate improved to 28.1% from 20.5% in the year-ago period.

Liquidity & Buyback

ZTO Express exited the first quarter of 2023 with cash and cash equivalents of RMB 9.55 billion compared with RMB 11.69 billion at December 2022-end.

As of Mar 31, 2023, ZTO Express purchased 38,250,449 ADSs at an average purchase price of $25.18, including repurchase commissions.

The company’s board of directors has further approved changes to its existing share repurchase program, increasing the value of shares to be repurchased from $1 billion to $1.5 billion and extending the effective time by one year through Jun 30, 2024. The company anticipates funding the repurchases from its existing cash balance.

2023 View

ZTO Express has updated its expectation for parcel volumes to the range of 29.27-30.24 billion (prior view: 28.78-29.75 billion) in 2023. The updated guidance represents an increase of 20-24% year over year.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

The consensus estimate has shifted -5.88% due to these changes.

VGM Scores

Currently, ZTO Express (Cayman) Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 C. 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.