Expeditors International of Washington, Inc. (NASDAQ:EXPD) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.
After this upgrade, Expeditors International of Washington's eleven analysts are now forecasting revenues of US$11b in 2021. This would be a modest 5.6% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 3.4% to US$4.27. Before this latest update, the analysts had been forecasting revenues of US$9.4b and earnings per share (EPS) of US$4.11 in 2021. Sentiment certainly seems to have improved in recent times, with a nice increase in revenue and a small lift in earnings per share estimates.
Despite these upgrades, the analysts have not made any major changes to their price target of US$91.36, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Expeditors International of Washington at US$109 per share, while the most bearish prices it at US$74.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Expeditors International of Washington's past performance and to peers in the same industry. We would highlight that Expeditors International of Washington's revenue growth is expected to slow, with forecast 5.6% increase next year well below the historical 9.1% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.2% next year. Factoring in the forecast slowdown in growth, it seems obvious that Expeditors International of Washington is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Expeditors International of Washington.
Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Expeditors International of Washington that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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