Expeditors International of Washington (EXPD) is back in focus after recent commentary pointed to favorable expectations for its Q2 results, linked to rising rates and its handling of geopolitical logistics disruptions.
See our latest analysis for Expeditors International of Washington.
Recent interest around Expeditors International of Washington has come alongside stronger momentum, with a 90 day share price return of 20.24% and a 1 year total shareholder return of 50.15% at a latest share price of $172.02. This suggests investors are reacting to both earnings expectations and changing views on risk and opportunity.
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After a 1 year total return of 50.15% and a share price that now sits above the average analyst target but close to some intrinsic value estimates, the key question is where fair value for Expeditors International of Washington actually sits.
Price to earnings of 26.9x: Is it justified?
For Expeditors International of Washington, the current picture is a mix of strong share price momentum and a valuation that screens as expensive on traditional metrics, particularly the P/E ratio of 26.9x.
The P/E multiple compares the company’s share price with its earnings per share, so a higher figure usually reflects investors being willing to pay more today for each dollar of profit. In logistics, where growth expectations and earnings quality can vary widely, this ratio often captures how confident the market feels about the durability of those profits.
In Expeditors International of Washington’s case, earnings have declined by 11.6% per year over the past 5 years and the most recent year also showed a small profit decline of 1%. Forecasts point to earnings growth of 4.38% per year. Against that backdrop, paying 26.9x earnings suggests the market is assigning a premium relative to both history and expected growth, especially when our DCF model indicates the stock is trading around 3% below its estimated future cash flow value of $177.35 and analysts’ average price target sits below the current $172.02 share price.
The premium looks even clearer when set against benchmarks. The current P/E of 26.9x stands well above both the Global Logistics industry average of 15.4x and the peer group average of 21.6x. It is also higher than the estimated fair P/E ratio of 19.1x that our regression based fair ratio work points to as a level the market could move towards if sentiment cooled.
Explore the SWS fair ratio for Expeditors International of Washington
Result: Price-to-earnings of 26.9x (OVERVALUED).
However, Expeditors International of Washington’s premium P/E and a share price above the average analyst target leave little room if earnings or pricing conditions disappoint.
Find out about the key risks to this Expeditors International of Washington narrative.
Another view on Expeditors International of Washington’s value
While the 26.9x P/E suggests Expeditors International of Washington is expensive relative to its own history and forecasts, the SWS DCF model points to a share price that sits around 3% below an estimated future cash flow value of $177.35. These two methods offer slightly different perspectives, so consider how each one fits into your broader investment framework.
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Expeditors International of Washington for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 44 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With sentiment on Expeditors International of Washington clearly mixed, it can help to review the numbers firsthand and decide what feels reasonable for you. If you want a quick snapshot of what the market currently views as the positives, take a look at the 2 key rewards
Looking for more investment ideas beyond Expeditors International of Washington?
If Expeditors International of Washington has you thinking more broadly, do not stop here. Use these focused screeners to spot other opportunities that might fit your style.
- Target potential mispricings by scanning companies that combine quality with attractive valuations through the 44 high quality undervalued stocks
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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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