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Subject:  EXPD - Q2 2013 - my thoughts Date:  8/6/2013  3:13 PM
Author:  TMFGebinr Number:  911 of 1287

Hi everyone,


It missed just slightly on revenue ($1.50 B vs. $1.54 B expected) and beat on EPS ($0.45 vs. $0.43 expected).

This company's stock has been in the doldrums for the past couple of years, trading in the $36 to $46 price range or so. Yet I believe good times are ahead for the company and shareholders.

There are more and more indicators that the U.S. and world economies are improving. Housing recovery, increased shipments and performance by BNSF and CNI railroads, nice results from Berkshire's wide swath of companies, higher sales of autos worldwide (generally) by Ford and BMW, container volumes through west coast ports up this year compared to last year (not by much, granted, but up), and so on. This kind of data supports CEO Rose's comment that improvements seen in Q1 continued to play out in Q2. For context, Q1 2013 was the "second best first quarter we've ever had."

While net revenue was up 3%, net earnings were up 10% and EPS was up 13% YoY for the quarter. (Net revenue is the revenue it actually keeps after billing for and paying the costs of shipments to the airlines and shipping companies it contracts with and is, to my mind, a better indicator than total revenue.)

If you haven't yet read the May 2013 8-K (Q&A), take a few minutes to do so, especially the first 7 questions and No. 16: The first question is a great rebuttal to the idea that a company should engage in currency hedging (including a quote from Ben Stein), while No. 16 is a good answer to the question of, "Why hasn't your stock price done much?" It starts, "If we understood the stock market, we might have your job."

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