ZIM Integrated (ZIM) $23 (Shipping)
Highly Cyclical dependent on freight rates.
The short-term pop may continue for a while, I’m not investing in it because it’s too cyclical and difficult to predict freight rates, which are again tied to the global economy.
This year is very good based on increased freight rates and the return of the dividend. Dividends return after higher freight rates, higher shipping volume, and lower fuel costs.
Management said it now expects $2.6 billion to $3 billion in adjusted earnings before interest, taxes, depreciation and amortization for 2024, up from a previous range of $1.15 billion to $1.55 billion.
During the second quarter, ZIM (ZIM) swung to a profit of $373 million, or $3.08 a share, from a loss of $213 million, or a loss of $1.79 a share, a year earlier.
ZIM’s (ZIM) board declared a cash dividend of approximately $112 million, or $0.93 a share, payable on Sept. 5.
In terms of downside risks, as aforementioned, ZIM’s underlying business is highly cyclical and responds sensitively to shipping rates. To wit, the rates were mostly in the range of $2,000 to $4,000 a year ago per 40-foot container. These rates have climbed substantially since then and peaked in the $8,000 to $10,000 range recently.
There haven’t been enough improvements in 2-3 year forecasts which are still negative for sales and earnings, so definitely not a long term investment.