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How Will ZTO Express (ZTO) Perform This Earnings Season?

Zacks Equity Research
·4-min read

ZTO Express (Cayman) ZTO is scheduled to release third-quarter 2021 earnings results on Nov 17, after market close.

ZTO has a mixed surprise record as its earnings per share outpaced the Zacks Consensus Estimate in two of the last four quarters (missing the consensus mark in the other two).

ZTO Express Cayman Inc. Price and EPS Surprise

ZTO Express Cayman Inc. Price and EPS Surprise
ZTO Express Cayman Inc. Price and EPS Surprise

ZTO Express Cayman Inc. price-eps-surprise | ZTO Express Cayman Inc. Quote

The consensus estimate for third-quarter earnings has been stable at 22 cents over the past 60 days.

Against this backdrop, let’s discuss the factors that might have impacted ZTO’s performance in the September quarter.

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Akin to the last few quarters, we expect escalated selling, general and administrative expenses to have hurt ZTO Express’ third-quarter bottom-line performance as well. Increase in pay and accrued bonuses is likely to have induced the elevation in SG&A costs.

Gross margin is likely to have contracted in the to-be-reported quarter, mainly due to the decline in average selling prices as a result of intense competition. However, ZTO’s express delivery services unit is likely to have performed well in the third quarter on the back of strong parcel volumes.

Earnings Whispers

The proven Zacks model does not predict an earnings beat for ZTO Express this time around. This is because the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: ZTO Express has an earnings ESP of 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate of 22 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ZTO Express carries a Zacks Rank #4 (Sell) currently.

Highlights of Q2 Earnings

ZTO Express’ earnings of 24 cents per share beat the Zacks Consensus Estimate by a penny. However, the bottom line declined year over year due to high costs.

Total revenues of $1,134.5 million increased in double digits year over year owing to a rise in revenues at the core express delivery services unit (contributing to 90.8% of the top line).

Stocks to Consider

Investors interested in the broader Transportation sector may consider Diana Shipping DSX and Copa Holdings CPA as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Diana Shipping has an Earnings ESP of +5.88% and a Zacks Rank #2, presently. DSX will release third-quarter 2021 results on Nov 17. The Zacks Consensus Estimate for third-quarter earnings has been stable at 17 cents over the past 30 days. Shares of the shipping company have increased 11.8% in a year’s time.

While steep fuel costs are likely to have affected Diana Shipping’s bottom line, increased time-charter revenues are likely to have boosted its top line in the September quarter. Time charter revenues are likely to increase owing to the uptick in the average time charter rates for DSX’s vessels during the quarter.

Copa Holdings has an Earnings ESP of +11.77% and a Zacks Rank of 3 at present. CPA is scheduled to report third-quarter 2021 earnings numbers on Nov 17. The Zacks Consensus Estimate for third-quarter earnings has been revised 54.1% upward over the past 60 days. Shares of CPA have gained 2.2% over the past three months.

Driven by factors like ramped-up vaccination, economic activities are slowly picking up the pace, buoying consumer confidence in Latin America. As a result, passenger revenues are likely to have improved at Copa Holdings in the September quarter.


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ZTO Express Cayman Inc. (ZTO) : Free Stock Analysis Report

Diana Shipping inc. (DSX) : Free Stock Analysis Report

Copa Holdings, S.A. (CPA) : Free Stock Analysis Report

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Zacks Investment Research