Zim Integrated Shipping Services (ZIM, Financial) is trading with a price-earnings of 2.2. It’s got one of the lowest price-earnings ratios you can find if you’re screening for real value stocks. Despite not being a growth stock, shares of the Isreali shipping firm are trending up, recently hiting an all-time high of more than $74. As of the writing of this article, shares traded around $73.61.
This uptrend is much different than most equities right now. The major U.S. indexes, such as the S&P 500 and the Nasdaq 100, have recently been putting in six-month lows. It’s unusual to find a stock going so strongly against this trend that a new all-time high is being established. This leads me to wonder if Zim could be a potential value opportunity.
Other value characteristics for Zim include a price-sales ratio of 1.00 and a price-to-free-cash-flow ratio of 1.98. Long-term debt exceeds shareholder equity, but the current ratio remains positive at 1.60. Zim is paying a $10.00 per share dividend that comes to annualized yield of 14.15%; this seems excessively large and leads me to wonder how long it can continue at this level.
This year’s earnings per share are up by an astonishing 619%, but Wall Street expects the coming 12 months to show a decline in earnings, which could be one reason why the stock still trades at such low valuation ratios. The short float of 6.82% is not outrageously high, but it is significantly greater than most NYSE-listed equities. If those shorts are ever forced to cover, that might contribute to a decent rally.
Zim’s stock is highly liquid with an average daily volume of 3.62 million shares. The GuruFocus summary of financials shows two good signs and two medium warning signs. The complete warning signs report plus financial strength and profitability indicators is show below:
Whether Zim can continue to trade even higher is the question that investors who are interested in the stock need to answer. On the one hand, it is trending up in the wake of strong results, but as analysts expect global supply chain issues to ease in the coming year, the momentum could turn out to be short-lived.
