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What's in the Cards for Expeditors (EXPD) in Q2 Earnings?

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Expeditors International of Washington, Inc. (EXPD - Free Report) is slated to report second-quarter 2017 results on Aug 8.

Last quarter, the company delivered a negative earnings surprise of 7.14% and reported mixed results during the same. Earnings (on an adjusted basis) of 52 cents per share fell short of the Zacks Consensus Estimate by 4 cents and also declined 1.89% on a year-over-year basis due to higher costs. However, revenues of $1,545.1 million beat the Zacks Consensus Estimate of $1,524.7 million and also improved 8.93% from the year-ago figure. 

Let’s see how things shape up for this announcement.

Factors Likely at Play

Higher costs are likely to hit the company’s bottom line in the second quarter. Challenging conditions in airfreight services market due to overcapacity woes might also hamper the results this soon-to-be-reported quarter. Besides, adverse impact of foreign currency movements is anticipated to upset the quarterly performance.

However, the company shows encouraging efforts to reward shareholders through dividend payments and buybacks. A 5% payout hike was made in May. Also, its strength lies in a sound, debt-free balance sheet, maintained by its asset-light business model.

Earnings Whispers

Our proven model does not conclusively show that Expeditors is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.

Zacks ESP: Expeditors has an Earnings ESP of -3.33%. This is because the Most Accurate estimate is pegged lower at 58 cents per share than the Zacks Consensus Estimate’s 60 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although Expeditors’ Zacks Rank #3 increases the predictive power of ESP, its negative ESP leaves our earnings surprise prediction inconclusive.

We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Per our model, the following stocks from the broader Transportation sector possess the right combination of elements to come up with an earnings beat this quarter.

Copa Holdings, S.A. (CPA - Free Report) has an Earnings ESP of +4.29% and a Zacks Rank #2. The company will release second-quarter results on Aug 9.

LATAM Airlines Group S.A. (LTM - Free Report) has an Earnings ESP of +200.00% and a Zacks Rank #2. The company will report second-quarter results on Aug 18. You can see the complete list of today’s Zacks #1 Rank stocks here.

Euronav NV (EURN - Free Report) has an Earnings ESP of +50.00% and a Zacks Rank #3. The company will report second-quarter results on Aug 10.

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