Expeditors (NYSE:EXPD) Delivers Strong Q1 Numbers But Stock Drops

Logistics and freight forwarding company Expeditors (NYSE: EXPD) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 20.8% year on year to $2.67 billion. Its GAAP profit of $1.47 per share was 9.1% above analysts’ consensus estimates.

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"We continue to pull the right levers to grow all of our businesses with current customers as well as new ones," said Daniel R. Wall, President and Chief Executive Officer.

Company Overview

Expeditors (NYSE: EXPD) offers air and ocean freight as well as brokerage services.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Expeditors’s 6.5% annualized revenue growth over the last five years was mediocre. This was below our standard for the industrials sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Expeditors’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 14.1% annually. Expeditors isn’t alone in its struggles as the Air Freight and Logistics industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Airfreight and Ocean freight, which are 33.8% and 29.3% of revenue. Over the last two years, Expeditors’s Airfreight revenue (transport by plane) averaged 7% year-on-year declines while its Ocean freight revenue (transport by sea) was flat.

This quarter, Expeditors reported robust year-on-year revenue growth of 20.8%, and its $2.67 billion of revenue topped Wall Street estimates by 3.6%.

Looking ahead, sell-side analysts expect revenue to decline by 2.9% over the next 12 months. Although this projection is better than its two-year trend, it's hard to get excited about a company that is struggling with demand.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Expeditors has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.6%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, Expeditors’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Expeditors generated an operating profit margin of 10%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Expeditors’s EPS grew at a remarkable 12.7% compounded annual growth rate over the last five years, higher than its 6.5% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t expand.

Diving into Expeditors’s quality of earnings can give us a better understanding of its performance. A five-year view shows that Expeditors has repurchased its stock, shrinking its share count by 19.3%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Expeditors, its two-year annual EPS declines of 11.2% mark a reversal from its (seemingly) healthy five-year trend. We hope Expeditors can return to earnings growth in the future.

In Q1, Expeditors reported EPS at $1.47, up from $1.17 in the same quarter last year. This print beat analysts’ estimates by 9.1%. Over the next 12 months, Wall Street expects Expeditors’s full-year EPS of $6.02 to shrink by 8.3%.

Key Takeaways from Expeditors’s Q1 Results

We were impressed by how significantly Expeditors blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. Zooming out, we think this quarter featured some important positives, but shares traded down 5.3% to $105.93 immediately following the results.

Is Expeditors an attractive investment opportunity at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.