How Expeditors International of Washington stock has been performing

Expeditors International of Washington (EXPD) has attracted attention after a period of strong share performance, with the stock up about 7% over the past month and around 17% in the past 3 months. Investors are now weighing how this recent run aligns with the company’s fundamentals.

The recent 7 day share price return of 3.85% builds on the 30 day share price return of 6.94% and 90 day share price return of 16.89%, while the 1 year total shareholder return of 47.35% shows that recent momentum has come on top of already strong gains.

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With the stock recently trading around $166.62 and only a small intrinsic discount indicated at about 2.4%, plus a price above the average analyst target, it is reasonable to ask whether there is still a buying opportunity or if markets are already pricing in future growth.

Price-to-Earnings of 26.1x: Is it justified?

On a headline basis, Expeditors looks expensive, with a P/E of 26.1x compared with a peer average of 21.5x and a Global Logistics industry average of 14.7x.

The P/E ratio compares the current share price to earnings per share and is a quick gauge of how much investors are paying for each dollar of current earnings. For a logistics company such as Expeditors, a higher P/E often suggests the market is willing to pay up for quality, resilience or expected stability in earnings.

Here, the market is attaching a much richer multiple than both peers and the industry. The stock also trades above an estimated fair P/E of 17.9x. This is the level some models suggest the ratio could trend toward if enthusiasm cools. Taken together, these comparisons indicate the current price embeds relatively strong expectations around future profitability and capital efficiency, supported by high historical and forecast return on equity, rather than offering obvious value.

Compared with the Global Logistics industry average P/E of 14.7x, Expeditors trades at a sizeable premium. Against the estimated fair P/E of 17.9x, the gap is similarly wide, reinforcing the view that investors today are paying a high price for each unit of earnings.

Result: Price-to-Earnings of 26.1x (OVERVALUED)

However, this rich P/E leaves little margin for disappointment if Expeditors’ revenue growth of 4.02% and net income growth of 3.96% slow or if global trade volumes weaken.

Another view: DCF suggests only a small gap

Where the P/E points to an expensive stock, the SWS DCF model is less extreme. With Expeditors trading around $166.62 versus an estimated future cash flow value of $170.71, it screens as only about 2.4% undervalued. So is this a small margin of safety or just noise in the models?

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 this mixed, it helps to check the underlying numbers yourself, compare them with your expectations, and then decide how comfortable you are with the current setup. To see exactly what is driving optimism here, review the 2 key rewards

Looking for more investment ideas?

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• Target potential value opportunities by scanning companies that currently screen as 44 high quality undervalued stocks
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• Hunt for future standouts with the screener containing 20 high quality undiscovered gems

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.