ZIM Integrated Shipping Services Ltd. (ZIM) is currently a highly searched stock on Zacks.com. As an investor, you might be wondering about the factors that could affect the company’s performance in the near future.
Over the last month, ZIM’s share prices have dropped by -19.3%, while the Zacks S&P 500 composite index has shown a +3.9% change. Moreover, the transportation-shipping industry, where ZIM operates, has declined by 3.7%. The real question for investors is, what direction is ZIM’s stock headed?
The answer to this question lies in the company’s earnings projections and estimates. By evaluating a company’s earnings predictions, investors can ascertain its stock’s future direction, making it a crucial factor in making buy-and-hold decisions.
Revisions in Earnings Estimates
At Zacks, we prioritize evaluating a company’s projected earnings because we believe fair value determines a stock’s price based on its future earnings stream. We analyze the revisions in the earnings estimates of sell-side analysts covering the stock to reflect new business trends’ impact to arrive at this value. If a company’s earnings estimates increase, its fair value also increases, making its stock attractive to investors. This increases its stock price. Research has shown a strong correlation between earnings estimate revisions and near-term stock price movements.
ZIM’s consensus earnings estimate for the current quarter forecasts a loss of $0.85 per share, indicating a change of -107.7% from the previous year. The Zacks Consensus Estimate has changed -62.5% over the last 30 days. For the whole fiscal year, the consensus earnings estimate is-$2.27, pointing to a change of -105.9% from the prior year. Over the last 30 days, this estimate has changed -57.8%. However, the consensus earnings estimate of -$2.15 for the next fiscal year indicates a change of +5% from the previous year, with the estimate increasing by +54.2% over the past month.
Using our proprietary rating tool, the Zacks Rank, gives an indication of a stock’s near-term price performance. ZIM has a rank of #3 (Hold), which results from the change in consensus estimate along with three other factors related to earnings estimates. The figure below indicates the company’s forward 12-month consensus EPS estimate:
12 Month EPS
Revenue Growth Forecast
While earnings growth is crucial for a company’s financial health, an increase in revenue growth is equally important. Long-term growth in earnings is almost impossible for a company without corresponding revenue increases. Therefore, it is essential to know a company’s potential revenue growth.
ZIM’s consensus sales estimate for the current quarter stands at $1.34 billion, indicating a year-over-year change of -60.9%. For the current and next fiscal years, the estimates are $5.74 billion and $6.16 billion, respectively, representing changes of -54.3% and +7.3%.
Last Reported Results and Surprise History
ZIM reported revenues of $1.37 billion in the last reported quarter, representing a year-over-year change of -63%. EPS of -$0.50 for the same period compares with $14.19 a year ago. Compared to the Zacks Consensus Estimate of $1.56 billion, the reported revenues represent a surprise of -11.91%, while the EPS surprise was -177.78%. Over the last four quarters, ZIM surpassed consensus EPS estimates two times and topped consensus revenue estimates over the same period.
Valuation
Valuation is crucial for making any investment decision. Valuation multiples such as P/E, P/S, and P/CF ratios compared to historical values or industry data indicate whether the current stock price reflects the intrinsic value of the company’s growth prospects. As part of the Zacks Style Scores System, our Zacks Value Style Score (which evaluates both conventional and unconventional metrics) organizes stocks into five groups ranging from A to F. Stocks graded A are trading at a discount compared to their peers.
ZIM is graded A, indicating that it is currently trading at a discount compared to its peers. Click here to see the metrics driving this grade.
Bottom Line
By considering the factors mentioned above and analyzing the information available on Zacks.com, investors can decide whether it’s worth following ZIM’s market buzz. However, with a Zacks Rank #3 (Hold), it’s likely that ZIM will perform in line with the broader market in the near term.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
