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Why ZIM Integrated Shipping Services Stock Soared on Wednesday

By Rich Smith - May 19, 2021 at 12:24PM

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ZIM just crushed earnings and raised guidance.

What happened

Shares of Israel's ZIM Integrated Shipping Services (ZIM 1.30%) stock exploded 9.2% higher as of 11:45 a.m. EDT Wednesday, after the ocean-going container shipper reported estimate-busting sales and earnings for its fiscal first quarter of 2021.

Expected by Wall Street analysts to earn $4.70 per share on sales of $1.6 billion, ZIM instead reported a $5.35-per-share profit on sales of more than $1.7 billion.  

Smiling man in a hard hat in front of a loaded container ship

Image source: Getty Images.

So what

Revenue for ZIM's fiscal first quarter more than doubled year over year, up 112%, as the company reversed last year's Q1 net loss to earn $5.35 per share, when calculated according to generally accepted accounting principles (GAAP).

Commenting on the quarter, ZIM CEO Eli Glickman said, "This is truly a momentous time in ZIM's 75-year history." ZIM carried 28% more cargo in Q1 2021 than in Q1 2020, but what really helped ZIM blow the estimates out of the water was a tremendous 76% increase in the average rate it could charge on its freight. The cost of shipping a single 20-foot equivalent unit (TEU) on ZIM's routes in Q1 2021 hit $1,925 per day, helping to lift ZIM's operating profit 2,645% in comparison to last year's Q1.  

And to share the wealth with its shareholders, ZIM announced it will pay a special dividend of $2 per share on top of its regular annual dividend.

Now what

Looking ahead, ZIM says things are going so well that it's also raising its guidance for 2021 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to a range from $2.5 billion to $2.8 billion. Adjusted EBIT (earnings before just the interest and the taxes, roughly equivalent to operating income) will range from $1.85 billion to $2.15 billion.

That's 75% more than ZIM was previously promising. No wonder investors are pleased.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

ZIM Integrated Shipping Services Ltd. Stock Quote
ZIM Integrated Shipping Services Ltd.
ZIM
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