Logistics and freight forwarding company Expeditors (NYSE:EXPD) reported Q4 CY2024 results topping the market’s revenue expectations , with sales up 29.7% year on year to $2.95 billion. Its GAAP profit of $1.68 per share was 16.7% above analysts’ consensus estimates.
Is now the time to buy Expeditors? Find out in our full research report .
Expeditors (EXPD) Q4 CY2024 Highlights:
“As in Q3 2024, our fourth quarter results demonstrate our ability to adapt to highly volatile conditions and win new business,” said Jeffrey S. Musser, President and Chief Executive Officer.
Company Overview
Expeditors (NYSE:EXPD) offers air and ocean freight as well as brokerage services.
Air Freight and Logistics
The growth of e-commerce and global trade continues to drive demand for expedited shipping services, presenting opportunities for air freight companies. The industry continues to invest in advanced technologies such as automated sorting systems and real-time tracking solutions to enhance operational efficiency. Despite the advantages of speed and global reach, air freight and logistics companies are still at the whim of economic cycles. Consumer spending, for example, can greatly impact the demand for these companies’ offerings while fuel costs can influence profit margins.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Expeditors’s sales grew at a tepid 5.3% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a poor baseline for our analysis.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Expeditors’s history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 21.2% annually. Expeditors isn’t alone in its struggles as the Air Freight and Logistics industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.
We can better understand the company’s revenue dynamics by analyzing its most important segments, Airfreight and Ocean freight, which are 36% and 30.7% of revenue. Over the last two years, Expeditors’s Airfreight revenue (transport by plane) averaged 14.8% year-on-year declines while its Ocean freight revenue (transport by sea) averaged 12.7% declines.
This quarter, Expeditors reported robust year-on-year revenue growth of 29.7%, and its $2.95 billion of revenue topped Wall Street estimates by 4.3%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.
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Operating Margin
Expeditors has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.5%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.
Analyzing the trend in its profitability, Expeditors’s operating margin might have seen some fluctuations but has generally stayed the same over the last five years , highlighting the long-term consistency of its business.
In Q4, Expeditors generated an operating profit margin of 10.2%, up 1.4 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Expeditors’s EPS grew at a solid 11% compounded annual growth rate over the last five years, higher than its 5.3% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t expand.
We can take a deeper look into Expeditors’s earnings quality to better understand the drivers of its performance. A five-year view shows that Expeditors has repurchased its stock, shrinking its share count by 19.3%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Expeditors, its two-year annual EPS declines of 16.7% mark a reversal from its (seemingly) healthy five-year trend. We hope Expeditors can return to earnings growth in the future.
In Q4, Expeditors reported EPS at $1.68, up from $1.09 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Expeditors’s full-year EPS of $5.72 to shrink by 4.2%.
Key Takeaways from Expeditors’s Q4 Results
We were impressed by how significantly Expeditors blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good quarter with some key areas of upside. The stock traded up 5.2% to $119.62 immediately following the results.
Expeditors may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free .
