Expeditors International of Washington – WHERE ARE MY CONTRARIANS via /r/wallstreetbets #stocks #wallstreetbets #investing


Expeditors International of Washington – WHERE ARE MY CONTRARIANS

To those of u apes that dont know what Expeditors International of Washington (EXPD US) does, let me dumb it down for you.

Based in Seattle, WA, Expeditors is a leading third-party logistics provider. The company is engaged in the business of global logistics management, including international freight forwarding and consolidation, for both air and ocean freight.

They have 2 main business segments:

  1. Airfreight services (approx. 41% of rev) – Expeditors purchases cargo capacity from airlines on a volume basis and resells that space to our customers at lower rates than what those customers could negotiate directly from the airlines. As an agent they get a cut from both the airlines and the end customers.
  2. Ocean freight services (approx. 34% of rev) – Expeditors, when acting as an ocean freight consolidator, contracts with ocean shipping carriers to obtain transportation for a fixed number of containers between various points during a specified time period at agreed-upon rates. Again taking fees from both the shipping ape and their customers.
  3. The rest of the revenue is derived from their customs brokerage services where they help their customers clear the logistics of customs.

Now some numbers to bedazzle you uncultured dim-wits:

  1. Airfreight Tonnage +26% in 2021FY
  2. Ocean Containers +17% in 2021FY
  3. Revenues increased +72% YOY
  4. Operating Income +103% YOY with op.margins at 11.56%
  5. Sales growth +74.20% (AND THIS AINT EVEN A GROWTH COMPANY – but yes you retards are gonna say “duh bcos freight rates are so high yadayadayada, just shut up and read)
  6. Levered Free Cash Flow accounts for 72% of its Operating Cash Flow. In high inflation environment, companies with low debt will tend to do much better since they have no need to draw down large loans.

Alright so the numbers all look nice and shiny and the macro environment looks so sweet for it to shoot for the stars. But why has it traded down approx 30% since its ATH in Dec2021?

Reasons:

  1. Cyber attack – EXPD was attacked by a bunch of mongoloid keyboard warriors which forced them to shut down their operations for a week. Since then they have resumed operations and are fixing everything needed to carry on business. The market is concerned on the degree of impact it can have on the business, and there is no certainty as to the expenses EXPD will incur for their remedy-related operations.
  2. Worries that increase air travel reduces belly capacity on airlines. BUT if you read the above regarding their airfreight business, they have the ability to transfer costs downwards to their end customers. In short – they got pricing power.

Conclusion, TLDR:

  1. EXPD is getting shit on due to its cyber attack episode in Feb
  2. It is trading far below its value for a company that has extremely little debt and sustainable op. margins.
  3. EXPD does on acquisitions for growth – in short its all pure organic growth which means that their customers and relationships with airlines and shipping companies are concrete.
  4. With a defensible business model that can transfer increasing costs to their customers, it is only a matter of time for them to cover these costs + in the current rising freight rate environment due to supply shortages, it is only a matter of time.
  5. If you are a contrarian – BUY EXPD C 14 AUG 110, 120

kthxbai

Submitted April 07, 2022 at 06:16PM by kaydenlj
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