Category: 3. Business

Expeditors International of Washington (EXPD) has been attracting investor interest because of its record of outperforming earnings estimates over the last two quarters. Analysts are now watching for the next report in early November.

See our latest analysis for Expeditors International of Washington.

Expeditors International’s share price has rebounded in recent weeks, rising 7.4% over the past 90 days and recapturing ground lost earlier this quarter. Despite muted total shareholder return of just 0.8% over the past year, the stock’s three- and five-year total returns remain impressive. This suggests that while near-term momentum is building, long-term investors have still enjoyed strong compounding gains overall.

If strong execution like this has you looking further afield, now is the perfect opportunity to discover fast growing stocks with high insider ownership.

That leaves investors with a key question: Is Expeditors International currently undervalued given its recent momentum and analyst optimism, or has the market already priced in the company’s future growth prospects?

Expeditors International trades at a price-to-earnings (P/E) ratio of 19.1x, notably higher than both the global logistics industry average of 15.7x and its estimated fair P/E of 12x. With shares closing at $119.92, this elevated multiple suggests the market is paying a premium for expected earnings compared to many peers.

The price-to-earnings ratio measures how much investors are willing to pay per dollar of reported earnings. In the logistics sector, it is often used as a gauge of growth or quality relative to industry standards. For Expeditors International, this high P/E could signal that investors expect sustained earnings outperformance or have confidence in the company’s ability to weather industry cycles.

However, when compared to the global logistics average and the estimated fair value multiple for the business, Expeditors International’s premium stands out. This gap may indicate some market over-optimism about future growth, or it could reflect perceived strengths such as high returns on equity and a history of quality earnings. If the market normalizes, valuations could move closer to the fair ratio, so investors should keep that possibility in mind.

Explore the SWS fair ratio for Expeditors International of Washington

Result: Price-to-Earnings of 19.1x (OVERVALUED)

However, slowing revenue growth and negative net income trends could challenge further upside if Expeditors International does not reaccelerate operational performance soon.

Find out about the key risks to this Expeditors International of Washington narrative.

Beyond earnings multiples, a different story emerges when looking at Expeditors International through the lens of our DCF model. The SWS DCF model suggests the company is currently trading around 22% below its estimated fair value. This signals the shares may be undervalued despite the high price-to-earnings ratio. Could the market be missing something about Expeditors’ long-term cash flow potential?

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 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

If you would like to look at the numbers yourself or take a different approach, it only takes a few minutes to build your own story and see where your research leads. Do it your way

A great starting point for your Expeditors International of Washington research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

Companies discussed in this article include EXPD.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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Passive investing in index funds can generate returns that roughly match the overall market. But in our experience, buying the right stocks can give your wealth a significant boost. For example, the Objective Corporation Limited (ASX:OCL) share price is 45% higher than it was five years ago, which is more than the market average. It’s fair to say the stock has continued its long term trend in the last year, over which it has risen 24%.

Since the long term performance has been good but there’s been a recent pullback of 4.5%, let’s check if the fundamentals match the share price.

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In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During five years of share price growth, Objective achieved compound earnings per share (EPS) growth of 26% per year. This EPS growth is higher than the 8% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock. Of course, with a P/E ratio of 50.83, the market remains optimistic.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Objective’s TSR for the last 5 years was 52%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

It’s good to see that Objective has rewarded shareholders with a total shareholder return of 26% in the last twelve months. And that does include the dividend. That’s better than the annualised return of 9% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Investors in South Korea looking to hedge their big US stock holdings or play their next wager are embracing a new type of trades: leveraged VIX bets.

With about $130 million in inflows this year, the 2x Long VIX Futures exchange-traded fund — which seeks twice the returns of a gauge tracking Cboe Volatility Index futures — has become one of the favorite US-listed ETFs and was the seventh most bought in July, according to data from the Korea Securities Depository. The additions represent about one-fifth of the ETF’s global inflows.

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Chinese tech giants have paused plans to issue stablecoins in Hong Kong, after Beijing raised concerns about the rise of currencies controlled by the private sector.

Companies including Alibaba-backed Ant Group and ecommerce group JD.com had said over the summer they would participate in Hong Kong’s pilot stablecoin programme or issue virtual asset-backed products, such as tokenised bonds.

But they have since put their stablecoin ambitions on hold after receiving instructions from Chinese regulators, including the People’s Bank of China (PBoC) and Cyberspace Administration of China (CAC), not to move ahead, according to multiple people familiar with the situation.

PBoC officials advised against participating in the initial stablecoin rollout over concerns about allowing tech groups and brokerages to issue any type of currency, five people said.

One person with knowledge of the central bank’s briefings to the tech groups said the issuance of privately run stablecoins was also seen as a challenge to the PBoC’s digital currency project, the e-CNY.

“The real regulatory concern is, who has the ultimate right of coinage — the central bank or any private companies on the market?” said a different person.

Stablecoins are digital tokens pegged to fiat currencies such as the US dollar and are a cornerstone of crypto trading.

The pushback from Chinese authorities underscores how regulators around the world are keen to respond to the rise of stablecoins, particularly after the Trump administration championed them as a pillar of mainstream finance and a vehicle to project the US dollar’s dominance.

The European Central Bank has said widespread adoption of dollar stablecoins could hinder its ability to control monetary policy.

The Hong Kong Monetary Authority, the territory’s de facto central bank, in August started accepting applications for stablecoin issuers, establishing itself as a testing ground for the mainland.

In China, interest in the Hong Kong programme swelled over the summer, with some officials suggesting that renminbi-denominated stablecoins would potentially boost the yuan’s international use. 

Zhu Guangyao, former vice-minister of finance in China, argued in June that “the strategic purpose behind the US promotion of stablecoins is to preserve dollar supremacy” and it is crucial for China to respond to that financial challenge with the development of a stablecoin pegged to renminbi.

“We should fully leverage the pilot programmes in Hong Kong,” Zhu said at a forum in Beijing in June. “The renminbi stablecoin must be integrated into the overall design of the national financial strategy.” 

But two people with knowledge of the tech groups’ plans said financial regulators were taking a more cautious approach following a speech by former PBoC governor Zhou Xiaochuan in late August.

At a closed door financial forum in Beijing in July, Zhou urged a thorough evaluation of stablecoins and potential systemic risks they posed. 

“We need to be vigilant against the risk of stablecoins being excessively used for asset speculation, as misdirection could trigger fraud and instability in the financial system,” Zhou said at the China Finance 40 Forum, according to an article later published by the state-backed think-tank.

Zhou urged a “careful assessment of the true demand of tokenisation as a technological foundation”.

He added: “Although many believe stablecoins will reshape the payments system, in reality, there is little room to cut costs in the current system, particularly in retail payments.”

PBoC declined to comment. HKMA said it does not comment on market rumours. CAC, Ant and JD.com did not respond to requests for comment.

The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to more than offset the losers So we wouldn’t blame long term Amotiv Limited (ASX:AOV) shareholders for doubting their decision to hold, with the stock down 33% over a half decade.

Now let’s have a look at the company’s fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

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While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

In the last half decade Amotiv saw its share price fall as its EPS declined below zero. This was, in part, due to extraordinary items impacting earnings. At present it’s hard to make valid comparisons between EPS and the share price. However, we can say we’d expect to see a falling share price in this scenario.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It’s good to see that there was some significant insider buying in the last three months. That’s a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Dive deeper into the earnings by checking this interactive graph of Amotiv’s earnings, revenue and cash flow.

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Amotiv’s TSR for the last 5 years was -16%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

While the broader market gained around 12% in the last year, Amotiv shareholders lost 8.3% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example – Amotiv has 2 warning signs we think you should be aware of.

Amotiv is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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Plumbers, electricians and welders will be in huge demand as part of a national plan to train people for an extra 400,000 green jobs in the next five years, Ed Miliband has said.

The energy secretary revealed a new scheme to double those working in green industries by 2030, with a particular focus on training those coming from fossil fuel jobs, school leavers, the unemployed, veterans and ex-offenders.

He said the plan would involve measures to ensure companies receiving public grants and contracts need to create good jobs across the clean energy sector. It will also promote greater trade union recognition and collective bargaining in the clean energy sector, including when jobs are offshore.

Miliband’s announcement was welcomed by unions from Unite to the GMB, which have long been pushing for a more detailed plan for how people will switch from old fossil fuel industries to those in clean energy in the future.

As part of the plan, 31 professions will be designated as priorities for recruitment and training, with plumbers, heating and ventilating installers at the top of the list with an additional 8,000 to 10,000 needed by 2030. Carpenters, electricians and welders are the next highest in demand on the list, with 4,000 to 8,500 extra of each required.

Miliband said the national plan “answers a key question about where the good jobs of the future will come from”.

As well as flagging to jobseekers what kind of green jobs are needed, the energy secretary said it would “send a signal to the mayors, regional mayors, who have lots of responsibilities in this area about where they need to be directing their further education colleges and others where the big opportunities are.

“It sends a signal to industry, who have been saying … set out what are the needs going be and how are we going to fill them.”

Miliband said the promise of hundreds of thousands of new roles in the renewables and clean energy sector would show that Reform UK is “waging war on jobs” by challenging the switch to net zero.

“Obviously, this is a massive fight with Reform,” he said. “Reformers said they’ll wage war on clean energy. Well, that’s waging war on these jobs … It’s all part of their attempt at a culture war, but I actually think they’re out of tune with the British people because I think people recognise that we need, that we want the jobs from clean energy.

“We want the lower bills that it can bring. So let’s have the argument as a country about what we’re going to do. I’m really confident we can win this argument.”

He said estimates show jobs in wind, nuclear, and electricity networks all advertise average salaries of more than £50,000, compared with the UK average of £37,000, and are spread across coastal and post-industrial communities.

Other announcements in the plan include five new technical excellence colleges that will help train young people into essential roles, with skills pilots in Cheshire, Lincolnshire and Pembrokeshire to be backed by £2.5m towards new training centres, courses or career advisers.

There will also be a new programme to match veterans up with careers in solar panel installation, wind turbine factories and nuclear power stations, with other tailored schemes for ex-offenders, school leavers and the unemployed.

Government research suggests that 13,700 people who were out of work possessed many of the skills required for key roles in the clean energy sector, such as engineering and skilled trades.

There will also be a focus on upskilling existing oil and gas workers, who will benefit from up to £20m in total from the UK and Scottish governments to provide bespoke careers training for thousands of new roles in clean energy.

Sharon Graham, Unite’s general secretary, said: “Well paid, secure work must be at the heart of any green transition. Unite members will welcome the commitment to 400,000 green jobs with strong collective bargaining rights. The actions set out in this plan are initial steps in what must be an ambitious strategy for tangible jobs, backed by an equally ambitious programme of public investment.”

Charlotte Brumpton-Childs, a national officer at the GMB, said: “GMB has long campaigned for a jobs-first transition. The government is listening and having a jobs plan to underpin the industrial strategy is exactly what this country needs.”