It is a tough market for shipping companies, but Zim Integrated Shipping Services (ZIM 6.33%) managed to stay nimble and navigate through the rough waters successfully.
Shares of the Israel-based cargo ship operator soared as high as 13.5% on Monday morning, and traded up 7% as of 2:30 p.m. ET on a strong earnings report and reaffirmed full-year guidance.
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Full steam ahead in a difficult market
Zim is a global container shipping company serving more than 330 ports worldwide. The company grew revenue by 28% to $2.01 billion, topping expectations, and reported net income that more than doubled to $296 million. On a per-share basis, Zim earned $2.45, beating the $1.96 consensus estimate.
The company carried 944,000 containers in the quarter, up 12% from a year ago, and average freight rates surged 22% to $1,776 per container. CEO Eli Glickman said Zim has had success reallocating capacity as demand evolves along with tariffs.
“We continuously assess how to best allocate capacity and have taken steps to modify our network to match the changes in cargo flow from China and other Southeast Asian markets into the United States, including within the last week, which underscores the agile nature of our commercial strategy,” Glickman said.
Is Zim a buy?
It’s worth noting the quarter ended on March 31, prior to the “Liberation Day” United States tariff announcement. But Zim remains confident even with the tariff-related uncertainty, reaffirming its full-year guidance for earnings before interest, taxes, depreciation, and amortization (EBITDA).
Zim has a relatively modern, fuel-efficient fleet, and is having success quickly adjusting the movement of that fleet to respond to current trade conditions. This stock is not without risk, but for investors who can deal with the choppiness that comes with international shipping Zim is making a strong case for why it can be a winner in this sector.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends Zim Integrated Shipping Services. The Motley Fool has a disclosure policy.
