Here's Why Investors Should Give ZTO Express Stock a Miss Now

ZTO Express (ZTO) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.

Let’s delve deeper.

ZTO: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for third-quarter 2025 earnings has moved 7.35% south in the past 60 days. For the current year, the consensus mark for earnings has been revised to 3.89% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.

Dim Price Performance:  The company’s price trend reveals that its shares have lost 7% over the past six months against the transportation-services industry’s 4.9% growth.

ZTO Stock Six-Month Price Comparison

Weak Zacks Rank and Style Score: ZTO currently carries a Zacks Rank #5 (Strong Sell). The company’s current Value Score of D shows its unattractiveness.

Earnings Expectations: Downbeat earnings expectations cast a shadow over a company’s prospects. For 2025, ZTO’s earnings are expected to decline 10.78% year over year.

Other Headwinds: ZTO Express continues to grapple with increasing pressure on its bottom line due to rising expenses, which are challenging its financial stability. In 2024, the company experienced a 14.2% year-over-year increase in total cost of revenues. In the first half of 2025, ZTO witnessed a 21.5% year-over-year increase in total cost of revenues. This rise was largely driven by higher sorting hub operating costs and other related expenses.

Based on current market and operating conditions, ZTO Express lowered its 2025 parcel volume guidance to the range of 38.8 billion to 40.1 billion (reflecting 14-18% year-over-year growth) from the previously guided range of 40.8 billion to 42.2 billion (reflecting 20-24% year-over-year growth).

The domestic express delivery market is highly competitive due to the presence of big players like SF Express and STO Express. The company’s stock price may decrease if competition intensifies and becomes a hindrance.

Bearish Industry Rank 

The industry to which ZTO belongs currently has a Zacks Industry Rank of 223 (out of 248 groups). Such a weak rank places the industry in the bottom 9% of the Zacks industries. Studies have shown that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.

In fact, a robust stock in a weak industry is likely to underperform an ordinary stock in a strong group. Therefore, considering the industry’s performance becomes imperative.

Stocks to Consider

Investors interested in the Transportation sector may also consider LATAM Airlines Group LTM and The Greenbrier Companies GBX.

LTM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LTM has an expected earnings growth rate of 45% for the current year. The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters, missed once and met in the remaining two quarters, delivering an average beat of 4.04%.

GBX currently carries a Zacks Rank #2 (Buy).

Greenbrier has an expected earnings growth rate of 33% for the current year. The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and met once, delivering an average beat of 70%.

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This article originally published on Zacks Investment Research (zacks.com).

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