ZTO Express Down 18.7% Y/Y: Will the Plunge Continue Throughout 2025?

ZTO Express shares have declined 18.7% over the past year, underperforming its industry, driven by increasing operating costs, a downward revision of its 2025 parcel volume guidance from 40.8-42.2 billion to 38.8-40.1 billion, and intense market competition. This has led to a 4.52% reduction in the Zacks Consensus Estimate for ZTO's 2025 earnings, which are now projected to decline 11.38% year-over-year, signaling weak broker confidence and a Zacks Rank #4 (Sell) for the company.

Analysis

ZTO Express is facing significant fundamental headwinds, reflected in its 18.7% share price decline over the past year, which underperforms the transportation-services industry's 14.5% drop. The core issues are margin compression and decelerating growth. The company's total cost of revenues surged 21.5% year-over-year in the first half of 2025, exacerbating pressure on its bottom line. In response to challenging market conditions and intense competition from rivals like SF Express and STO Express, management has materially lowered its 2025 parcel volume guidance to a range of 38.8-40.1 billion, cutting the projected growth rate from 20-24% to 14-18%. This negative outlook is echoed by sell-side analysts, who have revised the 2025 consensus earnings estimate down by 4.52% in the last 60 days, now forecasting an 11.38% year-over-year earnings decline. The stock's challenges are compounded by operating in a poorly-ranked industry, which holds a Zacks Industry Rank of 206 out of 248, placing it in the bottom 16% and suggesting broader sector weakness.

Key Decisions for Investors

• Given the confluence of rising costs, lowered volume guidance, and an expected 11.38% earnings decline, investors should view ZTO Express with a bearish outlook and consider reducing exposure.
• Investors seeking opportunities within the transportation sector could evaluate a rotation into stronger-rated peers like LATAM Airlines (LTM) or SkyWest (SKYW), which have strong buy ratings and positive earnings growth expectations.
• For any existing long positions, closely monitor ZTO's quarterly reports for a reversal in cost inflation trends and any evidence of market share gains that could drive parcel volumes back towards the previously guided 20-24% growth range.