Is It Too Late To Consider ZIM After Its 36.3% Surge Amid Shifting Freight Outlook?

• If you are wondering whether ZIM Integrated Shipping Services is still a bargain or if the easy money has already been made, this article will walk through what the numbers are really saying about its value.
• The stock has been anything but quiet lately, with shares up 2.6% over the last week, 14.9% over the past month, and 36.3% over the last year, even though it remains down 17.5% year to date.
• These moves have been driven in part by shifting expectations around global freight rates and container demand, as investors try to gauge how long elevated pricing and rerouted shipping lanes might last. ZIM has also been in the headlines for its strategic positioning on key trade routes and ongoing efforts to manage capacity and costs, which can quickly change how the market prices its future cash flows.
• Right now, ZIM scores a 4 out of 6 on our valuation checks. This suggests it screens as undervalued on most, but not all, metrics. We will unpack those different valuation approaches next and then introduce an even more insightful way to think about value at the end of the article.

ZIM Integrated Shipping Services delivered 36.3% returns over the last year. See how this stacks up to the rest of the Shipping industry.

Approach 1: ZIM Integrated Shipping Services Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future, then discounting those cash flows back to today in dollar terms.

For ZIM Integrated Shipping Services, the latest twelve month Free Cash Flow is about $2.89 billion, a level that is not expected to be sustained indefinitely. Using a 2 Stage Free Cash Flow to Equity model, analysts forecast FCF of $731 million in 2026 and $626 million in 2027, with Simply Wall St extrapolating more normalized cash flows thereafter. By 2035, projected FCF moderates to roughly $549 million, reflecting a gradual step down from the current unusually strong conditions.

When all these future dollar cash flows are discounted back, the model arrives at an intrinsic value of about $34.54 per share. Compared with the current market price, this implies the stock is roughly 44.3% undervalued. This indicates the market is still pricing in a more pessimistic long term outlook than the cash flow projections would justify.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests ZIM Integrated Shipping Services is undervalued by 44.3%. Track this in your watchlist or portfolio, or discover 910 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for ZIM Integrated Shipping Services.

Approach 2: ZIM Integrated Shipping Services Price vs Earnings

For a profitable company like ZIM Integrated Shipping Services, the price to earnings ratio is a useful yardstick because it directly links what investors pay today to the profits the business is generating right now. In general, companies with stronger growth prospects and lower perceived risk can justify a higher PE multiple, while those with more cyclical or uncertain earnings usually trade on lower multiples.

ZIM currently trades on a PE of about 2.3x, which is far below both the Shipping industry average of roughly 9.9x and the wider peer group average of around 13.0x. On the surface, that kind of discount suggests the market is either very skeptical about the durability of current earnings or heavily discounting company specific risks.

Simply Wall St’s Fair Ratio, at about 0.8x, offers a more tailored view. This proprietary metric estimates what a reasonable PE should be for ZIM given its earnings growth outlook, risk profile, profit margins, market cap and the characteristics of its industry. Because it blends these company specific drivers, it is more informative than a simple comparison with peers or an industry average that may have very different growth and risk profiles. With the Fair Ratio of 0.8x sitting well below the current 2.3x, the stock screens as slightly expensive on this framework.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1462 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ZIM Integrated Shipping Services Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of ZIM Integrated Shipping Services with the numbers by telling a story about its future revenue, earnings and margins, then linking that story to a financial forecast and a Fair Value estimate you can compare with today’s share price. Narratives on Simply Wall St, available on the Community page and used by millions of investors, make this process accessible by turning assumptions about shipping demand, freight rates, margins and risk into a living valuation that automatically updates when new information like earnings, news or changes in analyst forecasts comes in. For ZIM, one investor might build a cautious Narrative around shrinking Transpacific volumes, thinner profit margins of about 1 percent and a Fair Value near 13 dollars, while another might focus on fleet upgrades, route diversification and stronger long term profitability to justify a higher Fair Value. Comparing each Narrative’s Fair Value to the current price helps both investors decide whether ZIM looks like a buy, hold or sell.

Do you think there's more to the story for ZIM Integrated Shipping Services? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com