When Expeditors International of Washington Inc (NASDAQ:EXPD) released its most recent earnings update (31 March 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Expeditors International of Washington’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not EXPD actually performed well. Below is a quick commentary on how I see EXPD has performed.
Did EXPD’s recent earnings growth beat the long-term trend and the industry?EXPD’s trailing twelve-month earnings (from 31 March 2018) of US$531.77m has jumped 24.40% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.25%, indicating the rate at which EXPD is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely because of an industry uplift, or if Expeditors International of Washington has seen some company-specific growth.
Over the past few years, Expeditors International of Washington grew its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US logistics industry has been growing its average earnings by double-digit 10.27% over the previous year, and a more muted 5.25% over the past half a decade. This growth is a median of profitable companies of 24 Logistics companies in US including Janel, bpost and Radiant Logistics. This means whatever tailwind the industry is deriving benefit from, Expeditors International of Washington is able to leverage this to its advantage.In terms of returns from investment, Expeditors International of Washington has invested its equity funds well leading to a 26.89% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16.09% exceeds the US Logistics industry of 4.91%, indicating Expeditors International of Washington has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Expeditors International of Washington’s debt level, has increased over the past 3 years from 32.86% to 37.90%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Expeditors International of Washington gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Expeditors International of Washington to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EXPD’s future growth? Take a look at our free research report of analyst consensus for EXPD’s outlook.
- Financial Health: Is EXPD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.