Should You Buy, Hold or Sell ZIM Stock Ahead of Q1 Earnings?

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14-05-2025

ZIM Integrated Shipping Services ZIM is set to report first-quarter 2025 results on May 19, before the market opens.
The EPS estimate for the to-be-reported quarter has been revised 8.3% downward to $1.89 per share over the past 60 days. The bottom-line projection indicates a year-over-year surge of 152%. The Zacks Consensus Estimate for quarterly revenues, currently pegged at $1.73 billion, suggests a year-over-year increase of 11%.
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For 2025, the Zacks Consensus Estimate for ZIM's revenues is pegged at $6.5 billion, implying a contraction of 22.5% year over year. The consensus mark for 2025 EPS is pegged at 85 cents, implying a decline of 95.2% year over year.
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 19.3%.
ZIM Integrated Shipping Services price-eps-surprise | ZIM Integrated Shipping Services Quote
Our proven model does not predict 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 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. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
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 a spoilsport. Geopolitical risks pose operational challenges and might hurt results. An update on the tariff concerns is also expected on the fourth-quarter conference call. We expect an update from the management on the current tariff-related scenario.
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 services 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 lost 8.5%, 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 0.32, way below the industry's 1.95. The company has a Value Score of A. ZIM's reading is lower than that of other shipping players like Frontline and Seanergy Maritime Holdings. While Frontline has a Value Score of B, Seanergy Maritime Holdings 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 ongoing 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 the ongoing 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. Agreed that tariff woes are showing signs of easing, but in the absence of long-term trade deals, the scenario continues to be uncertain.
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 May 19. Instead, they should monitor the developments of 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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