ZTO EXPRESS(ZTO) ZACKS·2024-11-29 17:31Core Insights - ZTO Express has experienced a significant decline in share price, falling in double digits over the past six months, underperforming its industry and competitors like C.H. Robinson Worldwide and Expeditors International [1][4] Financial Performance - ZTO updated its 2024 parcel volume guidance to a range of 33.7 billion to 33.9 billion, reflecting a year-over-year increase of 11.6% to 12.3%, down from a previous expectation of 34.73 billion to 35.64 billion, which represented a 15% to 18% increase [5] - The company's SG&A expenses rose by 25.6% year over year in 2023 and increased by 17.5% year over year in the third quarter of 2024, contributing to higher operating expenses [6] - ZTO's revenues from the core express delivery business grew by 18.1% year over year in the third quarter of 2024, driven by a 15.9% increase in parcel volume and a 1.8% rise in unit price [8] - Revenues from freight forwarding services increased by 0.8% year over year, while sales of accessories rose by 27.6% year over year [9] - ZTO's gross profit improved by 23.2% year over year, with the gross margin rate increasing to 31.2% from 29.8% in the previous year [9] Valuation - ZTO is currently trading at a discount compared to the industry based on its forward 12-month price-to-sales ratio, which is also below its median over the last five years, indicating an attractive valuation [10] Investment Outlook - Despite the attractive valuation and growth in parcel volume, the company faces headwinds that suggest it may not be the right time to buy ZTO stock, which currently holds a Zacks Rank of 3 (Hold) [12][13] - Investors are advised to monitor the company's developments for a more suitable entry point while those already invested should consider staying in the stock [13]