Buy, Sell or Hold ZIM Stock? Key Insights Ahead of Q4 Earnings
ZIM Integrated Shipping Services Ltd. ZIM is set to report fourth-quarter 2024 results on March 12, before market open.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The EPS estimate for the to-be-reported quarter has remained constant at $3.47 per share over the past 60 days. The bottom-line projection indicates a year-over-year surge of 382.1%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 73.1%.
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For 2025, the Zacks Consensus Estimate for ZIM's revenues is pegged at $7.2 billion, implying a contraction of 13.8% year over year. The consensus mark for 2025 EPS is pegged at $3.19, implying a decline of around 81% on a year-over-year basis.
In the trailing four quarters, this shipping company surpassed EPS estimates on three of the four quarters (missing the mark on the other occasion), with the average earnings surprise being 12.6%.
ZIM Integrated Shipping Services Ltd. price-eps-surprise | ZIM Integrated Shipping Services Ltd. Quote
Our proven model does not predict an earnings beat for ZIM this time around as well. 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 not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
ZIM has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
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. Geopolitical risks pose operational challenges and might hurt results. An update on the tariff concerns is also expected on the fourth-quarter conference call.
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.
Over the past year, shares of ZIM have surged 79.9%, outperforming the Zacks Transportation - Shipping industry and the Zacks Transportation sector. It has also performed better than fellow industry players Frontline FRO and Seanergy Maritime Holdings SHIP in the same timeframe.
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From a valuation perspective, ZIM is trading relatively cheap. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.34, way below the industry's 2.15. The company has a Value Score of A.
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Agreed that ZIM has quite a few factors working in its favor, including its shareholder-friendly approach and attractive valuation. However, the escalation of trade tension does not bode well for ZIM, as the company has significant exposure to both China and the United States. The shipping industry, of which ZIM is an integral part, is being hit by growing trade tensions globally. The industry is responsible for a high majority of goods involved in world trade. Trade-related tensions have the potential to slow down goods transportation. The Wall Street average target price of $18.34 for ZIM stock suggests a downside of more than 3% from current levels.
We can safely conclude that investors should refrain from rushing to buy ZIM, which is facing quite a few challenges, ahead of its earnings release on March 12. Instead, they should monitor the developments pertaining to the stock closely for a more appropriate entry point, as an erroneous and hasty decision could affect portfolio gains. ZIM's current Zacks Rank supports our thesis.
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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
This article originally published on Zacks Investment Research (zacks.com).
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