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Is a Beat in the Cards for Expeditors (EXPD) in Q3 Earnings?

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Expeditors International of Washington, Inc. (EXPD - Free Report) is slated to report third-quarter 2019 earnings numbers on Nov 5, before the market opens.

The Zacks Consensus Estimate for third-quarter earnings has been revised upward by a penny in the past 90 days. Moreover, the company has an impressive earnings history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters, the average beat being 10.5%. We expect the company to repeat this success story in third-quarter results as well.

Factors Likely at Play

Akin to the first two quarters of 2019, the company’s Ocean Freight and Ocean Services as well as Customs Brokerage and Other Services segments are expected to have performed well in the third quarter. While increased ocean freight container volumes are likely to have boosted revenues at the Ocean Freight and Ocean Services unit, the company’s growing customs brokerage and import services are expected to have driven revenues at the Customs Brokerage and Other Services division.

Notably, the Zacks Consensus Estimate for net revenues at the Ocean Freight and Ocean Services segment indicates an approximate 3.3% rise from the year-ago reported number. The same for net revenues at the Customs Brokerage and Other Services segment suggests an approximate 13.2% increase from the third-quarter 2018 reported figure.

However, sluggish export volumes out of North Asia and the United States are likely to get reflected in Expeditors’ primary unit Airfreight Services revenues. The consensus mark for net revenues at the Airfreight segment implies a 4.2% decline from the year-ago reported figure.

On the whole, the trade tensions between United States and China are hurting volumes as Expeditors has substantial exposure in China. The weak volumes are likely to have affected revenues from North Asia.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Expeditors this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Expeditors has an Earnings ESP of +0.74% as the Most Accurate Estimate is pegged at 91 cents, higher than the Zacks Consensus Estimate of 90 cents.

Zacks Rank: Expeditors carries a Zacks Rank #3.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q2 Earnings

In the last reported quarter, the company delivered a positive earnings surprise of 10%. Moreover, the bottom line increased 11% on a year-over-year basis owing to higher revenues and a lower effective tax rate. Although total revenues fell short of the Zacks Consensus Estimate, it improved 4% from the year-ago figure. Results were partly affected by lower air freight revenues.

Other Stocks to Consider

Investors interested in the broader Transportation  sector may also consider GasLog LP. (GLOG - Free Report) , Golar LNG Limited (GLNG - Free Report) and Seaspan Corporation (SSW - Free Report) as these stocks possess the right mix of elements to beat on earnings in their next releases.

GasLog has an Earnings ESP of +31.25% and a Zacks Rank of 3.  The company will report third-quarter 2019 results on Nov 6.

Golar LNG has an Earnings ESP of +16.52% and a Zacks Rank #3. The company will announce third-quarter earnings results on Nov 26.

Seaspan has an Earnings ESP of +29.41% and a Zacks Rank #2. The company will release third-quarter financial numbers on Nov 7.

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