Shares of Expeditors International of Washington, Inc. (EXPD - Free Report) have lost 6.5% against the industry's decline of 4.8% loss in a year’s time. The below -par performance was primarily caused by declining revenues in the Airfreight Services segment and the coronavirus outbreak in China.
Let’s take a detailed look into the factors hurting the stock.
High operating expenses due to higher fuel costs and labor has proved to be a setback for Expeditors. The coronavirus outbreak in China has proved to be a huge bane especially because the company has significant Chinese exposure. The extended closure of factories in China due to the virus outbreak might dent freight volumes in the March-end quarter. Global supply chains are likely to be affected owing to shortages of raw materials, parts and supplies.
Declining revenues in the Airfreight Services segment (2019 revenues down 10.5%) due to weakness pertaining to China operations have dented Expeditors' performance.
Since Expeditors operates globally, it is exposed to currency exchange rate risks. Notably, foreign currency losses increased more than 100% in 2019 on a year-over-year basis.
Negative Estimate Revisions and Lackluster Momentum Score
The negativity revolving around the stock is evident from the Zacks Consensus Estimate for the current year earnings being revised downward by 6.7% in the past 60 days to $3.48.
The company’s Momentum Score of D further highlights its short-term unattractiveness.
Additionally, Expeditors carries a Zacks Rank #4 (Sell).
Stocks to Consider
Few better-ranked stocks in the Zacks Transportation sector are Azul S.A (AZUL - Free Report) , Frontline Ltd. (FRO - Free Report) and Costamare Inc. (CMRE - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Azul, Frontline and Costamare have rallied 1.7%, 23% and 25.8%, respectively, in a year.
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