The logistics industry is well-positioned to capitalize on the continued growth of e-commerce and is poised for further expansion in the coming years.
Therefore, investors could consider buying fundamentally strong logistics stocks Universal Logistics Holdings, Inc. (ULH), AerCap Holdings N.V. (AER), and FedEx Corporation (FDX), as e-commerce expands.
The growth of e-commerce has been significant in recent years, driven by changing consumer preferences and the convenience of online shopping. As e-commerce has grown, so too has the demand for logistics services to support the delivery of goods purchased online. Logistics companies have all invested heavily in expanding their logistics networks to meet the rising demand for fast and efficient delivery services.
Additionally, there has been a rise in specialized logistics companies that cater specifically to e-commerce businesses. These companies offer services such as warehousing, order fulfillment, and last-mile delivery, helping businesses streamline their supply chain and improve the customer experience. These companies provide innovative solutions to help online retailers manage their shipping and fulfillment needs.
Moreover, rapid technological advancements with the integration of logistics technologies like automation, robots, wearables, drones, self-driving vehicles, cloud computing, the Internet of Things (IoT), etc. have driven the logistics industry. The U.S. e-commerce logistics market is projected to reach $198.39 billion by 2029, growing at an 8.9% CAGR.
Considering these factors, let’s examine the fundamentals of the three Air Freight & Shipping Services stocks, starting with the third in line.
Stock #3: Universal Logistics Holdings, Inc. (ULH)
ULH provides transportation and logistics solutions in the U.S., Mexico, Canada, and Colombia. The company offers truckload services, domestic and international freight forwarding, and customs brokerage services.
ULH’s trailing-12-month Return on Common Equity of 22.90% is 85.1% higher than the industry average of 12.37%. Its trailing-12-month EBITDA margin and levered FCF margin of 15.24% and 7.02% are 10.7% and 15.7% higher than the industry averages of 13.77% and 6.07%, respectively.
ULH’s total operating revenues for the fiscal first quarter that ended March 30, 2024, amounted to $491.91 million, up 12.5% year-over-year. Its EBITDA grew 70.8% from the year-ago quarter to $96.90 million. The company’s net income stood at $52.46 million and $1.99 per share, up 110.9% and 109.5% over the prior-year quarter, respectively.
For the quarter ending June 30, 2024, ULH’s revenue and EPS are expected to increase 11.9% and 26.7% year-over-year to $461.60 million and $1.14, respectively. It surpassed consensus revenue estimates in three of the trailing four quarters, which is impressive. The stock has gained 49.3% over the past nine months to close the last trading session at $39.44.
ULH’s POWR Ratings reflect this positive outlook. It has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ULH has a B grade for Growth, Value, Momentum, and Sentiment. It is ranked #3 out of 16 stocks in the Air Freight & Shipping Services industry. Click here to see ULH’s Stability and Quality ratings.
Stock #2: AerCap Holdings N.V. (AER)
Headquartered in Dublin, Ireland, AER leases, finances, sells, and manages commercial flight equipment in China, Hong Kong, Macau, the U.S., Ireland, and internationally.
On June 12, 2024, AER announced that it signed lease agreements for four 737-800 Boeing Converted Freighter (BCF) aircraft with JD Airlines, the cargo airline of JD Logistics, scheduled for delivery in 2024.
On May 8, 2024, AER announced a deal with Safran Aircraft Engines and Shannon Engine Support for the purchase of 150 new CFM LEAP spare engines valued at approximately $3 billion. The additional engines will deliver in line with the growing fleet of in-service Boeing 737MAX and Airbus A320neo Family aircraft.
AER’s trailing-12-month CAPEX/Sales of 79.24% is significantly higher than the industry average of 2.90%. Likewise, its trailing-12-month EBIT margin and net income margin of 52.69% and 42.81% are 414.4% and 605.5% higher than the industry averages of 10.24% and 6.07%, respectively.
For the fiscal first quarter that ended March 31, 2024, AER’s total revenues and other income, and cash, cash equivalents and restricted cash at end of period stood at $2.02 billion and $1.49 billion, up 8.2% and 17.6% year-over-year, respectively.
For the same quarter, its net income attributable to AER and earnings per share increased 39.8% and 68.7% over the prior-year quarter to $604.21 million and $3.02, respectively.
Street expects AER’s fiscal 2025 EPS, to increase 8.1% year-over-year to $11.20. Its revenue for the quarter ending September 30, 2024, is expected to increase 2.4% year-over-year to $1.94 billion. The company surpassed consensus EPS estimates in each of the trailing four quarters. AER has gained 46.8% over the past year, closing the last trading session at $89.03.
AER’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, equating to Buy in our proprietary rating system.
It has a B grade for Sentiment and Quality. It is ranked #2 in the same industry. Get AER’s Growth, Value, Momentum, and Stability ratings here.
Stock #1: FedEx Corporation (FDX)
FDX provides transportation, e-commerce, and business services in the U.S. and internationally. It operates through FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services segments.
On March 19, 2024, FDX’s FedEx Express expanded its footprint in the Middle East with its new Middle East, Indian Subcontinent and Africa state-of-the-art hub at Dubai World Central Airport in Dubai South. The launch of the hub marked a long-term investment of over $350 million into the UAE's economy through infrastructure and technological advancements in the facility.
FDX’s trailing-12-month asset turnover ratio of 1.02x is 29.5% higher than the industry average of 0.79x. Similarly, its trailing-12-month Return on Common Equity and Return on Total Assets of 17.18% and 5.10% are 38.8% and 3.9% higher than the industry averages of 12.37% and 4.91%, respectively.
FDX’s total revenue for the fiscal third quarter that ended February 29, 2024, stood at $21.74 billion. Its non-GAAP operating income increased 16.5% year-over-year to $1.36 billion. In addition, its non-GAAP net income rose 11.7% from the year-ago quarter to $966 million. Also, its non-GAAP earnings per share grew 13.2% year-over-year to $3.86.
Analysts expect FDX’s revenue for the quarter ending May 31, 2024, to increase marginally year-over-year to $22.11 billion. Its EPS for same quarter is expected to grow 9.2% year-over-year to $5.40. The company surpassed the Street EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 7.3%, closing the last trading session at $246.43.
FDX’s POWR Ratings reflect its robust prospects. It has an overall B rating, equating to Buy in our proprietary rating system.
FDX has a B grade for Sentiment and Quality. Within the Air Freight & Shipping Services industry, it is ranked first. Click here for the additional POWR Ratings of FDX (Growth, Value, Momentum, and Stability).
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FDX shares were trading at $248.98 per share on Monday afternoon, up $2.55 (+1.03%). Year-to-date, FDX has declined -1.08%, versus a 15.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Neha Panjwani
From her school days, Neha harbored a profound fascination for finance, a passion that steered her toward a career as an investment analyst following the completion of her bachelor's degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her comprehension of investment fundamentals. Neha's primary objective is to aid retail investors in discerning optimal investment opportunities by diligently evaluating crucial aspects of financial instruments, with a primary focus on stocks and ETFs. Her commitment lies in empowering individuals to make informed and strategic investment decisions in the dynamic world of finance.
3 Logistics Stocks to Buy as E-commerce Expands StockNews.com
