This Shipping Company Almost Always Beats Earnings Expectations

EXPD hasn't missed estimates since 2017

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This morning, I am recommending a bullish trade on Expeditors International of Washington, Inc. (NASDAQ:EXPD), the shipping logistics company.

EXPD hasn’t missed earnings estimates since 2017. With an earnings report coming up in May, I think it could beat expectations once again and continue making new highs.

Earnings Expectations Aren’t Too High for EXPD

Last quarter, analysts expected earnings per share (EPS) of $0.86 from EXPD, and the company outperformed. This quarter, EPS estimates are lower, at $0.85. At the start of this earnings season, the bar had been set low for most companies based on how the market was doing.

Part of this might be fears about weakness in the global economy. One of the biggest risks right now is weakness in Europe. Germany — the biggest economy in the European Union — revised its economic forecast lower once again. The country cut its growth projection in half again to a rate of just 0.5%, so it’s looking more and more likely that it will fall into recession.

It also appears that another trade war could be brewing between the U.S. and Europe, as President Trump has threatened to place tariffs on European automobiles and auto parts. That is one of the biggest industries in that region, so an escalation on this front could have a negative effect on their markets and ours.

EXPD is a company with a lot of international exposure, operating out of North America, South America, Asia, Europe, the Middle East, Africa and India. That exposure may have led to lower expectations for EXPD, but the company has weathered the trade war with China without missing a beat. I think the company could continue to outperform this quarter.

New Support Just Under $78

After its last earnings report, EXPD dropped slightly, possibly due to some profit taking. Then, as it started to rise again, it ran into old resistance around $77.50 and dropped back down to support at $73. After successfully retesting support, EXPD started climbing higher. In early April, it finally got above $77.50.

Daily Chart of Expeditors International of Washington, Inc. (EXPD) — Chart Source: TradingView

It retested its old resistance level as new support, and it looks like $77.50 is holding. Now EXPD has set a new 52-week high.

The stock pulled back slightly after reaching its high last week, and if it comes back down a little more, it will give us a good opportunity to buy a bullish call option. That’s why I’m recommending the following trade:

Buy to open the Expeditors International of Washington, Inc. (EXPD) July 19th $85 Calls (EXPD190719C00085000) at $1.45 or lower.

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