Is Expeditors International Headed for a Breakdown? – September 21, 2021

Expeditors International of Washington (EXPD) is a non-asset-based third-party logistics provider, mainly focused on international freight forwarding. It employs sophisticated IT systems and contracts with airlines and steamship carriers to move customers’ freight across the globe.

The company is benefiting from an increase in airfreight revenues. Its Airfreight Services revenues increased 48% year over year in first-half of the year. The firm’s acquisition of Fleet Logistics’ Digital Platform also bodes well as it has boosted the company’s online LTL shipping platform, Koho.

EXPD has a current ratio of 2.0 and a debt-to-equity ratio of 0.2. This indicates that it has more than enough liquidity to handle short-term obligations and that its debt level is manageable. These figures have led to a Quality Grade of B in our POWR Ratings system.

Over the past three years, sales have grown an average of 19% per year while earnings have grown 22.9% per year. Analysts expect earnings to rise 54.5% year over year in the current quarter.

The stock appears slightly overvalued with a trailing P/E of 21.37 and a forward P/E of 22.08. The stock had shown mixed performance from late July to the middle of last week. Since then momentum has been bearish as shown in the chart below.

Take a look at the 1-year chart of EXPD below with added notations:

EXPD has had a rough three days with a decline that has brought the stock back down to its key level of $120 (green). That level has provided support multiple times, as well as resistance.  Another rally could start from current levels, but a break of $120 may mean much lower prices for the stock.

If EXPD were to break below the $120 support, a short position could be entered, with a protective stop placed above the level.

EXPD shares were trading at $122.17 per share on Tuesday morning, up $0.96 (+0.79%). Year-to-date, EXPD has gained 29.05%, versus a 17.29% rise in the benchmark S&P 500 index during the same period.

Author: Christian Tharp