On Wednesday, Citi reaffirmed its Sell rating on shares of ZIM Integrated Shipping Services (NYSE:ZIM) with a consistent price target of $14.00, despite the company's third-quarter earnings surpassing expectations. ZIM reported an adjusted EBITDA of $1.53 billion, which exceeded the consensus estimate of $1.24 billion.
The company's EBIT also outperformed forecasts, coming in at $1.24 billion compared to the anticipated $952 million. This outperformance was largely attributed to higher-than-anticipated freight rates, which averaged $2,480 per TEU.
ZIM's cargo volumes met projections with a year-over-year increase of approximately 12%. In response to the strong quarterly results, ZIM updated its full-year guidance, now expecting adjusted EBITDA to reach between $3.3 billion and $3.6 billion, up from the previously forecast range of $2.6 billion to $3.0 billion. The new guidance surpasses the consensus estimate of $3.1 billion.
Similarly, the adjusted EBIT forecast has been raised to between $2.15 billion and $2.45 billion, compared to the prior range of $1.45 billion to $1.85 billion and above the consensus of $2.0 billion.
In addition to the revised financial outlook, ZIM announced a dividend distribution to shareholders. The company declared an ordinary dividend of $2.81 per share, which represents a 30% payout. Additionally, a special dividend of $0.84 per share was also declared. The firm noted that the upgraded guidance and special dividend are expected to be received positively by the market.
In other recent news, ZIM Integrated Shipping Services Ltd. experienced a significant third-quarter earnings beat, which surpassed analyst expectations and led to an increase in its full-year guidance. The company reported Q3 adjusted earnings per share of $9.34, exceeding the analyst consensus estimate of $6.95. Revenue for the quarter was $2.77 billion, a figure higher than the $2.39 billion anticipated by analysts.
These robust results were attributed to a 12% year-on-year increase in carried volume, reaching a record 970,000 TEUs (twenty-foot equivalent units) in Q3. The average freight rate per TEU also saw a substantial 118% year-on-year increase to $2,480. The company's President and CEO, Eli Glickman, noted the record carried volumes as a key contributor to the strong financial performance.
In light of these developments, ZIM adjusted its full-year 2024 guidance upwards. The company now anticipates adjusted EBITDA between $3.3 billion and $3.6 billion, a rise from its previous forecast of $2.6 billion to $3.0 billion. Finally, ZIM declared a regular dividend of $2.81 per share, supplemented by a special dividend of $0.84 per share, making a total dividend of $3.65 per share.
InvestingPro Insights
ZIM Integrated Shipping Services' recent performance has caught the attention of investors and analysts alike. According to InvestingPro data, the company's stock has shown remarkable strength, with a 305.23% price total return over the past year and a 188.22% return year-to-date. This aligns with the company's better-than-expected third-quarter earnings and upgraded full-year guidance.
Despite Citi's Sell rating, ZIM's financial metrics present a mixed picture. The company's revenue for the last twelve months stands at $5,972.9 million, with a gross profit margin of 29.92%. However, ZIM is currently not profitable over the last twelve months, with a negative P/E ratio of -30.43.
InvestingPro Tips highlight that ZIM pays a significant dividend to shareholders, which is reflected in the recently announced ordinary and special dividends. The current dividend yield is an attractive 13.89%, although it's worth noting that dividend growth has decreased by 85.47% in the last twelve months.
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for ZIM, providing a deeper understanding of the company's financial health and market position.
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