ZIM Integrated Shipping Services Ltd. ZIM is set to report third-quarter 2024 results on Nov. 20, before market open.
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The Zacks Consensus Estimate for third-quarter 2024 earnings was revised upward in the past 60 days to $6.19 per share. The consensus mark implies a massive 414.2% upsurge from the year-ago actual. The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $2.21 billion, suggesting a 73.8% uptick from the year-ago actual.
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ZIM has a mixed earnings surprise history, as reflected in the chart below.
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Earnings Whispers for Q3
Our proven model predicts an earnings beat for ZIM this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
ZIM has an Earnings ESP of +29.24% and currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Shape ZIM’s Q3 Results
We expect the company’s bottom-line performance to have been hit by escalated voyage operating costs. High labor costs are also likely to have been spoilsports.
On a brighter note, continued fleet expansion initiatives are likely to have driven the company’s performance. Reduced container availability due to Red Sea tensions is expected to have raised freight costs. This is anticipated to have aided the quarterly performance of ZIM, which provides service to East Mediterranean and Israeli ports. Revenues and carried volumes are expected to have surged due to the disruptions. Lower capacity is anticipated to have boosted earnings.
Price Performance & Valuation
On a year-to-date basis, ZIM shares have surged 144.9%, outperforming the industry’s gain of 19%. The company’s shares have also outperformed fellow industry players Frontline FRO and Seanergy Maritime Holdings SHIP in the same timeframe.
YTD Price Comparison
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From a valuation perspective, ZIM is trading at a discount compared with the industry based on its price/sales ratio. The company is trading at a forward sales multiple of 0.45 compared with its industry’s 2.33. The reading is also below its median of 1.73 over the last three years.
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Investor Considerations
Heightened freight rates due to the Red Sea shipping crisis are turning out to be a huge positive for ZIM. The crisis caused by the attacks by Yemen’s Houthi militants on vessels in the Red Sea has prompted many shipping companies, including ZIM, to hit a transit pause through this route.
The companies are using the longer and costlier route around the Cape of Good Hope in South Africa rather than going through the Suez Canal. Reduced container availability due to the Red Sea tensions has resulted in higher freight costs. The company’s long-term prospects are also solid.
ZIM’s long-term (3-5 years) earnings growth rate is an impressive 47.4%, higher than its industry’s 29.4%.
Final Verdict
Given the positivities surrounding the company, as highlighted throughout the write-up, we believe that investors should add ZIM stock to their portfolios for healthy returns ahead of its earnings release on Nov. 20. The company’s current Zacks Rank supports our stance.
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Frontline PLC (FRO): Free Stock Analysis Report
Seanergy Maritime Holdings Corp (SHIP): Free Stock Analysis Report
ZIM Integrated Shipping Services Ltd. (ZIM): Free Stock Analysis Report