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Here's Why You Should Retain Expeditors (EXPD) in Your Portfolio

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Expeditors (EXPD - Free Report) thrives with shareholder-friendly initiatives and strong liquidity but grapples with declining volumes and high capex challenges.

Factors Favoring EXPD

Expeditors impressively prioritizes shareholder value. Management announced a 15.5% increase in its semi-annual cash dividend in May 2022. Continuing its pro-shareholder approach, EXPD hiked its semi-annual cash dividend by a further 3% in 2023, adding up to 69 cents per share. The company actively pursued share buybacks, repurchasing 14.5 million shares in 2022 and 12.1 million shares in 2023.

Strategically, Expeditors strengthened its Koho LTL shipping platform by acquiring Fleet Logistics’ Digital platform, aligning with their Digital Solutions strategy for future growth.

Emphasizing financial robustness, Expeditors maintains a noteworthy current ratio (a measure of liquidity) of 2.02 as of the fourth quarter of 2023.

Key Risks

Expeditors grapples with declining airfreight and ocean container volumes, down 3% and 10% year over year in the December quarter, reflecting weakened demand and falling rates. Ongoing Red Sea tensions add uncertainties, and the outlook foresees persistent challenges.

High capital expenditures, reaching $86.8 million in 2022 and $39.3 million in 2023, surpass 2021 figures, posing financial challenges.

While recovering from a cyberattack in February 2023, Expeditors found such incidents disruptive, costly and undesirable due to potential risks.

Zacks Rank & Key Picks

EXPD currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the Zacks Transportation sector are as follows:

Copa Holdings (CPA - Free Report) is thriving amid increased air travel demand, propelled by strategic initiatives such as fleet modernization and a focus on the cargo segment. Copa currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

The Zacks Consensus Estimate for 2024 earnings has been revised 5.14% upward over the past 60 days. CPA has an impressive earnings surprise history, beating the Zacks Consensus Estimate in each of the past four quarters. The average beat is 18.02%.

American Airlines (AAL - Free Report) is experiencing positive momentum in air travel demand, particularly on the domestic front. The airline's notable efforts to reduce debt are commendable, targeting a $15 billion reduction by the end of 2025.

The Zacks Consensus Estimate for 2024 earnings has been revised 34.2% upward over the last 60 days. AAL has a stellar earnings surprise history, beating the Zacks Consensus Estimate in each of the past four quarters. The average beat is 119%. AAL carries a Zacks Rank #2.
 

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