ZIM Stock Breaks Out; Huge Profit Growth

ZIM Integ Shipping Svcs

ZIM Integ Shipping Svcs

ZIM

$2.49


4.24%


106%

IBD Stock Analysis

• Breaking out from cup-with-handle base with 59.78 buy point

Composite Rating

Industry Group Ranking

Emerging Pattern

Cup with Handle

* Not real-time data. All data shown was captured at
1:42PM EST on
01/11/2022.

ZIM stock is the IBD Stock Of The Day as the Alibaba shipping partner breaks out to highs. Rising freight volumes fueled huge profit growth and a raised 2021 outlook for the Israeli cargo shipping liner.

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In addition to container freight shipping capacity, Zim Integrated Shipping Services (ZIM) provides Alibaba.com (BABA) with logistics technology, driving efficiencies into the Chinese e-commerce giant’s international shipments.

Other fleet operators include Danaos (DAC), Star Bulk Carriers (SBLK) and Textainer Group (TGH). Shipping stocks have performed well during the coronavirus pandemic, continuing to trade at or near highs after big runs in 2021. Textainer Group stock, Star Bulk Carriers and IBD 50 stock ZIM each wields a perfect IBD Composite Rating of 99.

ZIM Stock Technical Analysis

Shares of Zim Integrated Shipping Services are breaking out in above-average volume from a consolidation with a 59.79 handle buy point. The stock had formed and broken out from a prior handle with a 58.41 buy point.

Both buy points are valid. For investors who purchased at the earlier breakout, the stock remains in a buy range through 61.33. The new handle carries slightly more risk because it is a slightly unorthodox high handle construct. This means the left-side high of the handle is above that of the attached consolidation. This buy range extends to 62.78.

In either case, on a MarketSmith chart, ZIM stock chalked up new highs on the stock market today. ZIM ended Tuesday’s session with a 4.7% gain, at 61.44.

The relative strength line for ZIM stock also made a new high alongside the breakout, according to MarketSmith chart analysis. That is a bullish sign.

A rising RS line means that a stock is outperforming the S&P 500 index. It is the blue line in the chart shown.

In addition to Zim Integrated Shipping’s 99 Composite Rating, it also has a top Relative Strength Rating of 99. That means ZIM stock has outperformed 99% of all stocks over the past year.

Zim Integrated Shipping Services Earnings and Fundamentals

For the September quarter, Zim earnings per share shot up 743% to $12.16 from $1.44 a year ago, according to FactSet, giving ZIM stock a boost. Revenue vaulted 210% to $3.136 billion. In the June quarter, Zim earnings leapt to $7.38 from 23 cents a year ago.

That’s especially impressive for a new IPO, many of which tend to struggle to turn a profit.

Cargo volumes, measured in TEU or twenty-foot equivalent units, rose 16% year over year. The average freight rate per TEU jumped 174%.

Shipping Stocks In 2022: Why This Year Could Echo The 2021 Boom

Citing record September-quarter results, Zim said it was “poised to return significant capital to shareholders in 2022,” translating to 30%-50% of 2021 net income. Zim issued a $2 per share special dividend in September 2021 and a $2.50 per share interim dividend in December 2021.

At the same time, Zim raised its full-year 2021 guidance. That reflected “Zim’s strong outlook and extremely positive container liner market fundamentals,” CEO Eli Glickman said in a news release.

Analysts on average expect Zim earnings to grow 625% in all of 2021, then to plunge 37% in 2022. Revenue is seen growing 164% in 2021, before falling 10% in 2022.

The company pays a quarterly dividend of $2.50 per share, yielding 16.4%.

Last January, ZIM stock came public amid a container shipping boom. Shipping rates surged amid strong demand for electronics, furniture, bicycles and other goods, with consumers riding out the pandemic close to home.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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