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Expeditors International Missed Earnings, Stock Fell 3.2%

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Expeditors International of Washington’s 3Q16 earnings

On November 8, 2016, Expeditors International of Washington (EXPD), a major US-based logistics company, announced its 3Q16 earnings. The company disappointed the market by reporting EPS (earnings per share) of $0.59. 

EXPD missed Wall Street analysts’ consensus estimated adjusted EPS of $0.65 by 9.2%. On a year-over-year basis, Expeditors’ earnings fell 6% in 3Q16.

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Stock price reaction

A further slowdown in global trade heavily impacted EXPD’s 3Q16 volumes and pricing ability. The Hanjin bankruptcy also disrupted trucking companies’ businesses, including Expeditors International’s business. Note that Hanjin was one of the world’s largest shipping companies. Immediately after EXPD’s 3Q16 earnings, panic gripped and investors sold the stock. EXPD fell -3.2% to settle at $50.3 on November 8, 2016.

EXPD’s peer C.H. Robinson Worldwide (CHRW) closed marginally up on the same day. Prominent US supply chain solutions provider XPO Logistics (XPO) saw a rise of 0.6%, asset-light integrated transportation solutions provider Landstar System (LSTR) saw a rise of 0.5%, and transportation industry leader J.B. Hunt Transport Services (JBHT) saw a rise of 2.5% on the day.

Investors looking for indirect exposure to transportation stocks can invest in the iShares U.S. Industrials ETF (IYJ). Prominent US railroad companies and airlines make up 5.4% and 4.9% of IYJ’s holdings, respectively.

What EXPD’s CEO said

Commenting on EXPD’s 3Q16 results, the company’s president and CEO, Jeffrey Musser, said, “During the most recent third quarter, air carriers abruptly adjusted buy rates to align with spikes in demand, and ocean carriers modified pricing as the market endured a significant disruption with the bankruptcy of one of the world’s larger shipping companies. Because of those events, the current rate environment was more unpredictable than usual.”

In this short post-earnings series, we’ll discuss EXPD’s 3Q16 revenue and revenue drivers. We’ll also take a look at its 3Q16 margins.

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