Logistics and freight forwarding company Expeditors (NYSE: EXPD) beat Wall Street’s revenue expectations in Q3 CY2025, but sales fell by 3.5% year on year to $2.89 billion. Its GAAP profit of $1.64 per share was 17.9% above analysts’ consensus estimates.

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Company Overview

Expeditors (NYSE: EXPD) offers air and ocean freight as well as brokerage services.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Expeditors grew its sales at a tepid 5.2% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Expeditors’s recent performance shows its demand has slowed as its annualized revenue growth of 3.3% over the last two years was below its five-year trend. We also note many other Air Freight and Logistics businesses have faced declining sales because of cyclical headwinds. While Expeditors grew slower than we’d like, it did do better than its peers.

Expeditors also breaks out the revenue for its most important segments, Airfreight and Ocean freight, which are 35.2% and 25.8% of revenue. Over the last two years, Expeditors’s Airfreight revenue (transport by plane) averaged 7.8% year-on-year growth while its Ocean freight revenue (transport by sea) averaged 13.8% growth.

This quarter, Expeditors’s revenue fell by 3.5% year on year to $2.89 billion but beat Wall Street’s estimates by 8.6%.

Looking ahead, sell-side analysts expect revenue to decline by 4.8% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will see some demand headwinds.

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Operating Margin

Expeditors has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.5%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, Expeditors’s operating margin decreased by 1.2 percentage points over the last five years. Many Air Freight and Logistics companies also saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction. We hope Expeditors can emerge from this a stronger company, as the silver lining of a downturn is that market share can be won and efficiencies found.

This quarter, Expeditors generated an operating margin profit margin of 10%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Expeditors’s EPS grew at a solid 10.6% compounded annual growth rate over the last five years, higher than its 5.2% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

Diving into the nuances of Expeditors’s earnings can give us a better understanding of its performance. A five-year view shows that Expeditors has repurchased its stock, shrinking its share count by 20.8%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Expeditors, its two-year annual EPS growth of 7.7% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Expeditors reported EPS of $1.64, up from $1.63 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Expeditors’s full-year EPS of $6.14 to shrink by 9.6%.

Key Takeaways from Expeditors’s Q3 Results

We were impressed by how significantly Expeditors blew past analysts’ EBITDA expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 2.8% to $126 immediately following the results.

Expeditors had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.