Is There Now an Opportunity in ZTO Express After China E-Commerce Regulatory Headlines?

• Wondering what ZTO Express (Cayman) stock is actually worth, whether you already hold shares or are thinking of jumping in? Let’s break down the factors that could unlock real value here.
• The shares have slid 2.1% in the last week and are down 16.1% over the past year. Over the last three years, they have actually delivered a solid 15.3% return for investors.
• Recent headlines have centered on China’s e-commerce shipping growth and regulatory environment. This has added both optimism and uncertainty for ZTO Express (Cayman). This evolving backdrop helps explain the recent share price shifts and sets the stage for re-examining what the company might be worth now.
• ZTO Express (Cayman) currently scores 6 out of 6 on our undervaluation checks, meaning it appears undervalued by all our measures. Next, we will dig deeper into how we assess this valuation, but keep reading for a perspective even numbers alone cannot provide.

Find out why ZTO Express (Cayman)'s -16.1% return over the last year is lagging behind its peers.

Approach 1: ZTO Express (Cayman) Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a company is worth today by projecting its future cash flows and discounting them back to the present. This model takes into account what ZTO Express (Cayman) is expected to earn and grows those figures over time, while recognizing that money in the future is worth less than money today.

Currently, ZTO Express (Cayman) generates approximately CN¥3.10 billion in Free Cash Flow. Analyst forecasts see this figure growing to around CN¥10.56 billion by 2027, with longer-term projections (extrapolated by Simply Wall St) suggesting Free Cash Flow could reach over CN¥19.14 billion by 2035. These numbers reflect a healthy level of expected growth within the logistics industry over the next decade. Note that projections beyond five years become less certain, but they are valuable for building a bigger picture.

By discounting all these estimated future cash flows back to today's terms, the DCF model calculates an intrinsic value of $46.98 per share. Based on current trading levels, this implies the stock is trading at a 60.1% discount to its fair value. In other words, ZTO Express (Cayman) appears significantly undervalued according to this approach.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests ZTO Express (Cayman) is undervalued by 60.1%. Track this in your watchlist or portfolio, or discover 831 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 ZTO Express (Cayman).

Approach 2: ZTO Express (Cayman) Price vs Earnings

The Price-to-Earnings (PE) ratio is a go-to valuation tool for profitable companies like ZTO Express (Cayman). It gives investors a quick sense of how much the market is willing to pay for each dollar of earnings. A company's PE can offer clues about growth expectations, with higher ratios often reflecting optimism for future expansion, while a lower PE can signal either lower growth expectations or a potential undervaluation. However, PE ratios should always be interpreted in light of the company’s risk profile and the industry it operates in.

Currently, ZTO Express (Cayman) trades on a PE ratio of 12.1x. For context, the average PE in the logistics industry sits at 16.1x, while ZTO’s peer average is even higher at 41.4x. Comparing simply to these benchmarks, ZTO Express (Cayman) looks attractively valued. However, not all companies deserve the same rating. This is where Simply Wall St's proprietary Fair Ratio comes in.

The “Fair Ratio” for ZTO Express (Cayman) is calculated at 14.9x, which factors in the company’s earnings growth outlook, risk profile, profit margins, industry characteristics, and size. Unlike blunt comparisons to industry averages or peers, the Fair Ratio blends in all the relevant context to set a tailored benchmark for what ZTO’s multiple should reasonably be.

ZTO Express (Cayman)’s actual PE of 12.1x is noticeably below the Fair Ratio of 14.9x, suggesting that based on a comprehensive view, the stock may be undervalued right now.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1394 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ZTO Express (Cayman) Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a clear story investors can build about a company by connecting their assumptions about fair value, future revenue, earnings potential, and profit margins to specific expectations for the business. Rather than relying only on numbers, Narratives let you describe why a company like ZTO Express (Cayman) deserves a particular valuation, blending financial forecasts with the broader business context.

On Simply Wall St’s Community page, Narratives are an easy and accessible tool used by millions of investors. Each Narrative links a company’s story to a dynamic forecast and calculated fair value, making it much easier to decide when to buy or sell simply by comparing Fair Value with today’s market Price. The power of Narratives comes from their adaptability. As new information such as news or earnings arrives, the forecast and fair value update automatically, helping your decision-making stay relevant.

For example, the most optimistic Narrative for ZTO Express (Cayman) highlights strengthening margins and rapid automation, forecasting steady revenue growth and a fair value of $28.34 per share. Meanwhile, the most cautious Narrative focuses on fierce competition and regulation, projecting slower growth and a fair value near $17.79. Narratives let you see these perspectives, test your own assumptions, and make smarter, story-driven investment decisions.

Do you think there's more to the story for ZTO Express (Cayman)? 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.

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