Expeditors Misses Estimates Again - Analyst Blog
07 November 2012 - 11:50AM
Zacks
Expeditors International of
Washington Inc.’s (EXPD) quarterly performance lacked
luster yet again. The company reported third quarter 2012 adjusted
earnings of 42 cents per share that narrowly missed the Zacks
Consensus Estimate of 43 cents and deteriorated 16% from 50 cents
earned in the year-ago quarter. Weak revenues from air and ocean
freight segments were primarily responsible for the
underperformance.
Net income attributable to
shareholders declined 17% year over year to $88.5 million in the
reported quarter.
Total revenue decreased 5% year
over year to $1.5 billion, and missed the Zacks Consensus Estimate
of $1.6 billion. The decline in revenue was primarily due to lower
shipments from air freight given poor global demand and lack of
projects.
On a year-over-year basis, third
quarter revenues from Other North America inched up 1%. Revenues
from the United States, Latin America, Asia Pacific, Europe and
Africa, as well as the Middle East and India declined 1.8%, 5.4%,
4.0%, 13.6% and 5.3%, respectively.
Quarterly gross profit (net
revenue) dropped 6% year over year to $465.1 million, resulting in
gross margin (yield) of 30.4%, down from 30.7% in the year-ago
quarter.
Operating income declined 11% year
over year to $145.1 million and operating expenses also fell 3.4%
year over year to $1.39 billion in the reported quarter.
Revenue
Segments
Airfreight
Services revenue fell 15.5% year over year to $622.7
million in the third quarter.
Ocean Freight and Ocean
Services revenue dropped 7.6% year over year to
$549.3 million.
Customs Brokerage and
Other Services revenues inched up 0.23% year over
year to $359.7 million.
Liquidity
Expeditors’ exited the third
quarter with operating cash flows of $69.2 million compared with
$93.3 million at the end of the year-ago quarter.
Our Analysis
We are concerned about the
uncertainty over the ocean freight businesses that are likely to
restrict volume growth and affect near-term profitability for
Expeditors. Further, we also expect a negative impact on the
company’s margins due to freight rate increases by third party
carriers. Additionally, competitive threats from peers like
CH Robinson Worldwide Inc. (CHRW) as well as
dependence on asset-based transportation providers contribute to
our negative stance on the company.
We are currently maintaining our
long-term Neutral recommendation on Expeditors International. For
the short-term (1-3 months) the company retains a Zacks #3 Rank
(Hold).
CH ROBINSON WWD (CHRW): Free Stock Analysis Report
EXPEDITORS INTL (EXPD): Free Stock Analysis Report
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