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Investing.com - Benchmark has reiterated its Hold rating on freight forwarding company Expeditors International (NYSE:EXPD), currently valued at $15.9 billion, following the company’s second-quarter earnings report that exceeded analyst expectations. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, with particularly strong marks in profitability and cash flow management.
The freight forwarder reported second-quarter revenue that was 12% ahead of Benchmark’s expectations and earnings per share of $1.34, representing an 8% year-over-year increase. This surpassed Benchmark’s estimate of $1.15 and the FactSet consensus of $1.25 per share. The company’s strong performance is reflected in its robust return on equity of 38% and return on invested capital of 29%.
Expeditors’ airfreight business showed growth in both tonnage and rates across most regions despite limits on de-minimis shipments, with customers shipping technology and high-value inventory ahead of tariff deadlines. Ocean volumes also increased, primarily due to higher exports from South Asia as customers relocated sourcing to that region.
Ocean freight rates softened throughout the quarter despite increased volume, which Expeditors attributed to expanded ocean capacity. The company continues to expect an unpredictable freight environment, consistent with its commentary in previous quarters.
Benchmark cited Expeditors’ solid balance sheet with no debt and its demonstrated ability to manage through downturns while preparing for eventual upturns as positive factors, noting the company has added headcount since the fourth quarter without hampering earnings growth. InvestingPro analysis reveals the company has maintained dividend payments for 33 consecutive years and holds more cash than debt on its balance sheet. For deeper insights into EXPD’s financial health and growth potential, including access to 10+ additional ProTips and comprehensive valuation metrics, explore the full Pro Research Report available on InvestingPro.
In other recent news, Expeditors International reported strong second-quarter earnings, with earnings per share reaching $1.34, surpassing the consensus estimate of $1.25. Following this performance, Stifel raised its price target for the company to $118, maintaining a Hold rating. Similarly, TD Cowen increased its price target to $111, citing better-than-expected results despite maintaining a Sell rating. However, BofA Securities downgraded Expeditors International from Neutral to Underperform due to rapidly falling containership rates, although it slightly raised its price target to $118.
Additionally, Expeditors International formalized new employment agreements with three top executives, setting their annual base salaries at $100,000 with potential for incentive-based compensation. Meanwhile, Benchmark analysts maintained a Hold rating, noting the company’s effective cost control and surpassing of revenue projections for the first quarter, with earnings per share rising 26% year-over-year to $1.47. Expeditors International has faced a significant drop in shipment volumes from China to the U.S. since March, attributed to changing trade conditions. Despite these challenges, the company achieved higher airfreight revenues driven by technology sector shipments and growth in ocean volumes.
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