Is Buying ZIM Stock a Smart Move Before It Reports Q3 Earnings?

Seanergy Maritime Holdings Corp (SHIP) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Over the past month, shares of this company have returned -9.3%, compared to the Zacks S&P 500 composite's +3.3% change. During this period, the Zacks Transportation - Shipping industry, which Seanergy Maritime Holdings falls in, has lost 5.3%. The key question now is: What could be the stock's future direction?

Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Revisions to Earnings Estimates

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

For the current quarter, Seanergy Maritime Holdings is expected to post earnings of $0.50 per share, indicating a change of -13.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +22.2% over the last 30 days.

The consensus earnings estimate of $2.49 for the current fiscal year indicates a year-over-year change of +289.1%. This estimate has changed +4.1% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $2.11 indicates a change of -15.1% from what Seanergy Maritime Holdings is expected to report a year ago. Over the past month, the estimate has changed -7.5%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Seanergy Maritime Holdings is rated Zacks Rank #5 (Strong Sell).

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Revenue Growth Forecast

Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.

In the case of Seanergy Maritime Holdings, the consensus sales estimate of $40.2 million for the current quarter points to a year-over-year change of +2%. The $165.98 million and $160.26 million estimates for the current and next fiscal years indicate changes of +50.6% and -3.5%, respectively.

Last Reported Results and Surprise History

Seanergy Maritime Holdings reported revenues of $44.36 million in the last reported quarter, representing a year-over-year change of +81.4%. EPS of $0.69 for the same period compares with -$0.14 a year ago.

Compared to the Zacks Consensus Estimate of $42.1 million, the reported revenues represent a surprise of +5.35%. The EPS surprise was +11.29%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

Valuation

No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Seanergy Maritime Holdings is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Conclusion

The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Seanergy Maritime Holdings. However, its Zacks Rank #5 does suggest that it may underperform the broader market in the near term.

Zacks Investment Research

Star Bulk Carriers SBLK is scheduled to report third-quarter 2024 results on Nov. 19, after market close.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at 71 cents per share and $342.3 million, respectively.

The earnings estimate for the to-be-reported quarter has declined 2.7% in the past 60 days. The bottom-line projection indicates year-over-year growth of 108.8%. The Zacks Consensus Estimate for quarterly revenues indicates a year-over-year increase of 53.5%.

SBLK has a decent earnings surprise history. It has surpassed the consensus estimate in three of the trailing four quarters and missed once, delivering an average surprise of 31.7%.

Star Bulk Carriers Corp. Price and EPS Surprise

Star Bulk Carriers Corp. price-eps-surprise | Star Bulk Carriers Corp. Quote

Against this backdrop, let us check out the factors expected to have influenced Star Bulk’s September-quarter performance.

We expect vessel operating expenses to have been high in the to-be-reported quarter. This is likely to have dented SBLK’s bottom-line performance. Costs are most likely to have shot up due to elevated fuel expenses. Supply-chain disruptions are anticipated to have dampened this shipping company’s performance.

However, continued fleet expansion (including cargo fleet) initiatives are likely to have driven the company’s performance. The positive sentiment surrounding the dry bulk market is also expected to have aided the company’s performance in the to-be-reported quarter. The Capesize market is very strong currently. This reflects strong demand for dry bulk commodities from not only China but also the rest of the world and bodes well for dry bulk shipping companies like SBLK.

Earnings Whisper for SBLK

Our proven model does not predict an earnings beat for Star Bulk this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Earnings ESP of SBLK: Star Bulk has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

SBLK’s Zacks Rank: Star Bulk currently carries a Zacks Rank #5 (Strong Sell).

A Stock to Consider

Here is a stock from the broader Zacks Transportation sector that investors might want to consider, as our model shows that this stock has the right combination of elements to beat third-quarter 2024 earnings.

ZIM Integrated Shipping Services ZIM has an Earnings ESP of +29.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is scheduled to report third-quarter 2024 earnings on Nov. 20.

ZIM has a discouraging earnings surprise history, having surpassed the Zacks Consensus Estimate twice in the preceding four quarters and missing twice. The average miss is 0.3%.

Q3 Performances of Other Transportation Companies

Delta Air Lines DAL reported third-quarter 2024 earnings (excluding 47 cents from non-recurring items) of $1.50 per share, which fell short of the Zacks Consensus Estimate of $1.56. Earnings decreased 26.11% on a year-over-year basis due to high labor costs.

Revenues of $15.68 billion surpassed the Zacks Consensus Estimate of $15.37 billion and increased 1.2% on a year-over-year basis, driven by strong air travel demand. Adjusted operating revenues (excluding third-party refinery sales) totaled $14.59 billion, flat year over year.

Norfolk Southern Corporation’s NSC third-quarter 2024 earnings (excluding $1.6 from non-recurring items) of $3.25 per share beat the Zacks Consensus Estimate of $3.10 and increased 22.6% year over year due to lower costs.

Railway operating revenues were $3.05 billion in the quarter under review, lagging the Zacks Consensus Estimate of $3.09 billion. However, the top line increased 2.7% year over year, with the Merchandise and Intermodal segments registering an improvement in revenues.

Zacks Investment Research

Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.

With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.

Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.

Should You Consider ZIM Integrated Shipping Services?

The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. ZIM Integrated Shipping Services (ZIM) holds a #1 (Strong Buy) at the moment and its Most Accurate Estimate comes in at $8 a share 13 days away from its upcoming earnings release on November 20, 2024.

By taking the percentage difference between the $8 Most Accurate Estimate and the $6.19 Zacks Consensus Estimate, ZIM Integrated Shipping Services has an Earnings ESP of +29.24%. Investors should also know that ZIM is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

ZIM is just one of a large group of Transportation stocks with a positive ESP figure. C.H. Robinson Worldwide (CHRW) is another qualifying stock you may want to consider.

C.H. Robinson Worldwide, which is readying to report earnings on January 29, 2025, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $1.11 a share, and CHRW is 83 days out from its next earnings report.

C.H. Robinson Worldwide's Earnings ESP figure currently stands at +0.92% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.10.

ZIM and CHRW's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

Zacks Investment Research

Here are three stocks with buy ranks and strong growth characteristics for investors to consider today, November 6th:

Twilio Inc. TWLO: This customer engagement platform solutions company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 3.5% over the last 60 days.

Twilio Inc. Price and Consensus

Twilio Inc. price-consensus-chart | Twilio Inc. Quote

Twilio has a PEG ratio of 0.59 compared with 44.37 for the industry. The company possesses a Growth Score of A.

Twilio Inc. PEG Ratio (TTM)

Twilio Inc. peg-ratio-ttm | Twilio Inc. Quote

Interface, Inc. TILE: This modular carpet products company carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 7% over the last 60 days.

Interface, Inc. Price and Consensus

Interface, Inc. price-consensus-chart | Interface, Inc. Quote

Interface has a PEG ratio of 1.14 compared with 1.28 for the industry. The company possesses a Growth Score of A.

Interface, Inc. PEG Ratio (TTM)

Interface, Inc. peg-ratio-ttm | Interface, Inc. Quote

ZIM Integrated Shipping Services ZIM: This company that provides shipping containers and related services carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 2.7% over the last 60 days.

ZIM Integrated Shipping Services Ltd. Price and Consensus

ZIM Integrated Shipping Services Ltd. price-consensus-chart | ZIM Integrated Shipping Services Ltd. Quote

ZIM has a PEG ratio of 0.04 compared with 0.30 for the industry. The company possesses a Growth Score of B.

ZIM Integrated Shipping Services Ltd. PEG Ratio (TTM)

ZIM Integrated Shipping Services Ltd. peg-ratio-ttm | ZIM Integrated Shipping Services Ltd. Quote

See the full list of top ranked stocks here.

Learn more about the Growth score and how it is calculated here.

Zacks Investment Research

Seanergy Maritime Holdings Corp (SHIP) came out with quarterly earnings of $0.69 per share, beating the Zacks Consensus Estimate of $0.62 per share. This compares to loss of $0.14 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 11.29%. A quarter ago, it was expected that this company would post earnings of $0.62 per share when it actually produced earnings of $0.77, delivering a surprise of 24.19%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Seanergy Maritime Holdings, which belongs to the Zacks Transportation - Shipping industry, posted revenues of $44.36 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 5.35%. This compares to year-ago revenues of $24.45 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Seanergy Maritime Holdings shares have added about 18.5% since the beginning of the year versus the S&P 500's gain of 19.8%.

What's Next for Seanergy Maritime Holdings?

While Seanergy Maritime Holdings has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Seanergy Maritime Holdings: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.53 on $40.78 million in revenues for the coming quarter and $2.49 on $164.31 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Transportation - Shipping is currently in the bottom 30% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, International Seaways (INSW), is yet to report results for the quarter ended September 2024. The results are expected to be released on November 7.

This company is expected to post quarterly earnings of $1.42 per share in its upcoming report, which represents a year-over-year change of -28.6%. The consensus EPS estimate for the quarter has been revised 29.7% lower over the last 30 days to the current level.

International Seaways' revenues are expected to be $211.24 million, down 12.6% from the year-ago quarter.

Zacks Investment Research