ZTO Express (NYSE:ZTO) Valuation: Is Steady Earnings Growth Still Underappreciated by the Market?

ZTO Express (Cayman) NYSE:ZTO has quietly delivered steady gains this year, with the stock up about 18% over the past year as earnings and revenue growth continue to edge higher.

See our latest analysis for ZTO Express (Cayman).

The latest leg up, including an 11.22% one month share price return and 14.56% three month share price return to about $21.01, suggests sentiment is quietly improving even though the three year total shareholder return is still negative. This points to a recovery story that is building momentum rather than peaking.

If you like the steady progress at ZTO but want more ideas in logistics adjacent areas, it is worth exploring auto manufacturers as another way to tap into shifting global trade and transport trends.

Given ZTO’s double digit earnings growth, improving share price and a sizeable gap to analyst targets and intrinsic value estimates, is the market still underestimating its future potential or already pricing in the next leg of growth?

Most Popular Narrative: 9.8% Undervalued

With the narrative fair value sitting above ZTO Express (Cayman)'s last close of $21.01, the story hinges on how margins and growth evolve from here.

Ongoing mix improvement reflected in over 50% year on year growth in retail parcel volume and a higher share of differentiated/premium services supports higher per parcel unit revenues and gross profits (e.g., CN¥0.17/unit lift in revenue and CN¥0.02/unit in gross profit), buffering the business against commoditization and enhancing medium term earnings.

Read the complete narrative.

Curious how steady volume growth, richer parcel mix and slightly higher margins all combine into that upside? The narrative connects them into one powerful valuation roadmap.

Result: Fair Value of $23.29 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, if price competition intensifies or parcel growth slows more than expected, margins and valuation could struggle to keep pace with the upbeat narrative.

Find out about the key risks to this ZTO Express (Cayman) narrative.

Build Your Own ZTO Express (Cayman) Narrative

If you see the story differently, or simply like to test ideas with your own numbers, build a personalized ZTO narrative in minutes, Do it your way.

A great starting point for your ZTO Express (Cayman) research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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