ZIM Integrated Stock Down Despite Beating on Q4 Earnings and Revenues

ZIM Integrated Shipping Services Ltd. ZIM reported better-than-expected fourth-quarter 2024 earnings and revenues. Earnings and revenues surpassed the Zacks Consensus Estimate by 34.3% and 3.9%, respectively.

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ZIM’s fourth-quarter 2024 earnings of $4.66 per share breezed past the Zacks Consensus Estimate of $3.47. In the year-ago quarter, the container liner shipping company had incurred a loss of $1.23 per share. Quarterly revenues of $2.17 billion beat the Zacks Consensus Estimate of $2.08 billion. In the year-ago quarter, the shipping company had reported revenues of $1.21 billion.

The shipping company expects adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to be $1.6-$2.2 billion for 2025. Adjusted EBIT (earnings before interest and taxes) for 2025 is expected to be $350-$950 million. The adjusted EBITDA for 2024 was $3.69 billion, a year-over-year increase of 252%. The adjusted EBIT for 2024 was $2.55 billion compared with an adjusted EBIT loss of $422 million for 2023. Naturally, the lower guidance for 2025 failed to please investors. As a result, the stock plunged 4.58% on March 12, despite beating earnings and revenue estimates.

Declining freight rates could pressure future earnings. Management stated on the conference call that freight rates have declined steeply in the past few weeks. Moreover, the guidance takes into account the high degree of uncertainty related to global trade, geopolitical issues and the timing of the Red Sea opening. The ongoing trade tensions and the likely U.S. tariffs on Chinese-built vessels may hurt ZIM’s fleet operations.

More Details on Q4 Results

Carried volume in the fourth quarter increased 24.9% year over year to 982 thousand TEUs (twenty-foot equivalent units). The average freight rate per TEU in the December quarter increased 71% year over year to $1,886. Adjusted EBITDA in the December quarter skyrocketed 409% year over year to $967 million.

Apart from the solid top-and-bottom-line performances in the December quarter, ZIM’s board declared a regular dividend of approximately $382 million or $3.17 per ordinary share. Together with previous dividends shelled out in 2024, the payout represents approximately 45% of full-year 2024’s net income. The dividend will be paid out on April 23, 2025, to holders of ZIM ordinary shares of record as of March 25.

ZIM’s shareholder-friendly approach throws light on its financial prosperity. The shipping company’s high dividend yield is a huge positive for income-seeking investors. This highlights confidence in its cash flow and prospects.

ZIM’s Zacks Rank

ZIM currently carries a Zacks Rank #3 (Hold).

Some Transportation Stocks to Consider

Investors interested in the Zacks Transportation sector may consider SkyWest SKYW and Allegiant Travel Company ALGT. While SkyWest sports a Zacks Rank #1 (Strong Buy), Allegiant carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SkyWest

SkyWest, founded in 1972, is based in St. George and operates regional jets for major U.S. airlines. SKYW’s track record of successfully meeting the requirements of each of its airline heavyweight partners bodes well. Revenues from flying agreements (which account for the bulk of the top line) are impressive due to SKYW’s above ability. Owing to an uptick in air travel demand, passenger volumes have been upbeat and are likely to increase going forward as well. This is likely to keep SKYW's top line in good shape.

SKYW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 16.71%. The Zacks Consensus Estimate for 2025 earnings per share has been revised 7.7% upward in the past 60 days.

Allegiant

Allegiant has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for ALGT’s 2025 earnings per share has been revised 22.2% upward in the past 60 days.

The company has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 22.9%.
 

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This article originally published on Zacks Investment Research (zacks.com).

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