EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. (EXPD): what the price assumes

In the published model solve dated 2026-Q2, anchored at $190.97, EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. (EXPD) is priced for +13.2% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/EXPD

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=18)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Customs brokerage and other services is now the largest of Expeditors' three revenue lines at roughly 39% of 2025 revenue, ahead of airfreight at 36% and ocean at 25%, and it grew 13% last year while ocean fell 11%.

• The company owns almost none of the capacity it sells, which is the source of both the returns and the risk: the filing states that "Our ability to deliver our services depends on service providers having sufficient capacity available to purchase."

• What to watch is rate direction rather than volume. Second-quarter results are due August 4, 2026, and the 2025 filing warns that reopened Red Sea transit and softening demand would add capacity and push average sell and buy rates down.

Bull Case

The moat is easier to describe than to build. Expeditors buys transport capacity wholesale and sells it retail, and it owns essentially none of the aircraft or vessels involved. In airfreight, the filing says the company typically acts as a consolidator, and that "we purchase cargo capacity from airlines on a volume basis and resell that space to our customers". The margin comes from aggregation, from knowing which lane clears at what rate on which day, and from the paperwork nobody else wants to touch. None of that requires capital.

The returns say the aggregation works. Expeditors converts close to a tenth of gross revenue into operating profit. C.H. ROBINSON (CHRW), the closest listed comparison and a larger business at 16.20 billion dollars of revenue, converts 4.9%. HUB GROUP (HUBG) converts 3.8%. Both of those peers shrank last year, by 6.7% and 5.8% respectively. Doubling the profitability of your nearest competitor in a business commonly described as commoditised is the fact the whole bull case turns on.

Where that profitability is coming from has shifted, and shifted in a useful direction. Customs brokerage and other services revenue rose 13% in 2025 and airfreight rose 9%, while ocean fell 11%. The filing explains the brokerage strength plainly: "Growing complexity in customs brokerage due to the dynamic trade environment has resulted in high demand for our brokerage services". Tariff regimes that change quarterly are miserable for importers and excellent for the firm that files the declarations. Brokerage is also the least capacity-dependent of the three lines, which means the mix has been drifting toward the part of the business least exposed to carrier pricing.

There is an unexpected second driver. The company reports that "Airfreight services, road freight and warehousing and distribution services (included with customs brokerage and other services) all benefited from strong demand from our technology customers investing in artificial intelligence infrastructure." Data centre buildouts move a great deal of heavy, urgent, expensive equipment, and heavy urgent equipment travels by air. That is a demand source freight forwarders did not have a few years ago.

The balance sheet finishes the argument. Liquid assets stood at 1.32 billion dollars at the end of March 2026 against funded borrowings of about 30 million, so the company earns interest rather than paying it. Diluted shares have gone from 141.7 million in 2024 to 134.1 million in the March 2026 quarter, and in February 2026 the board authorised a further 3 billion dollars of repurchases to begin once the existing programme runs its course. A business that needs no capital to grow and produces more than it can reinvest tends to shrink its own share count. The plan this one uses was first authorised in November 2001, to buy the count down toward 200 million shares; the board has been lowering that target ever since.

Bear Case

Freight forwarding earns its best money when capacity is scarce, and capacity has stopped being scarce. The 2025 filing is unusually direct about what comes next: "Additional ocean and air transportation capacity will become available as demand softens due to uncertainty in economic and trade regulations and safe passage through the Red Sea resumes. These conditions could result in declines in average sell and buy rates." A forwarder's spread is the gap between the rate it sells at and the rate it buys at. When ships stop going the long way around Africa and the same vessels serve the same trade lanes in fewer days, effective capacity rises without a single new ship being built, and the spread narrows on both sides at once.

That process has already begun in the largest capacity-dependent line. Ocean freight and other services revenue fell 11% in 2025, which the filing attributes to lower average sell and buy rates from an imbalance between demand and available ocean capacity. Ocean has gone from 30% of revenue in 2024 to 25% in 2025. The two lines that grew, brokerage and airfreight, grew for reasons that are themselves policy-dependent, and the company says so: "Should international trade slow or there is substantial removal of tariffs, our revenues and operating income could be negatively impacted." A brokerage business booming because customs rules are complicated has an unusual dependency, since the complication is a political choice rather than an industrial fact.

Look at what actually reached the bottom line and the cycle position becomes clearer. Operating income rose 1% in 2025 and net earnings to shareholders were flat; earnings per share rose 4%, and the difference between those two figures is the buyback rather than the business. Meanwhile salaries and related costs rose 9%, on an 8% increase in headcount hired to handle the brokerage surge. Costs added during a demand spike are not easily removed when the spike passes, and they were added to serve the line most exposed to a change in trade policy.

That is the setting in which the price has to be read. Today's quote works out to roughly 20 times company-wide operating income and requires something in the region of 12.8% annual operating-profit growth sustained for five years. The business delivered 1% growth in that line last year. Of comparable fast-growers, only about half held a pace like that for five years. The requirement is not absurd for a company of this quality, but it is a long way from what the most recent full year produced, and the gap has to close through either rate recovery or brokerage staying complicated.

Only one family of valuation approaches reaches the current price, and it is the one that projects forward growth. What the company owns, what it earns today with no growth credited, and what peer multiples pay for comparable businesses all land well beneath the quote. That is the signature of a durability premium: the market is paying for a franchise that static methods cannot capture. Sometimes that judgment is correct. The point for a buyer is that there is no second line of defence in the numbers if the durability turns out to be cyclical strength wearing a moat's clothes.

Valuation

What is being bought here is a spread, not an asset base. Expeditors turns close to a tenth of gross revenue into operating profit without owning the planes and ships that carry the freight, and today's quote capitalises that at roughly 20 times company-wide operating income. Run the arithmetic backwards and the price embeds operating-profit growth of about 12.8% a year over a five-year stage, computed against a cost of capital near 8.9%. That is the assumption a buyer inherits.

Set it against the record. Revenue reached 11.07 billion dollars in 2025 and operating income 1.05 billion, the latter up 1% on the year, with the March 2026 quarter running 2.78 billion of revenue and 294.8 million of operating income. Recent quarters have been better than the full-year figure suggests, but the required pace sits above what the last full year produced, and roughly half of comparable fast-growing companies have held such a pace across five years.

The methods disagree in an unusually one-sided way. Only the forward-growth approaches reach the price. Book value plus profitability, no-growth earnings power, and peer multiples all land materially beneath it, with the price sitting about 63% above where the peer-multiple methods come out and further above the asset-based ones. When only the forward frame reaches the price, the premium is being paid for durability that static methods structurally cannot capture. Whether that premium is earned is a judgment about the franchise, not something the arithmetic settles.

The peer comparison is thin but pointed. C.H. ROBINSON (CHRW) runs a 4.9% operating margin on 16.20 billion dollars of revenue, and HUB GROUP (HUBG) 3.8% on 3.73 billion; both saw revenue decline last year. Expeditors converts roughly twice as much of each revenue dollar into profit as either. A reader can take that two ways: as evidence the franchise is real, or as a reminder that in a business where two large competitors earn low single-digit margins, the high-margin outlier is the one with furthest to fall.

Solvency removes one worry entirely. Net cash of about 1.29 billion dollars on the funded-borrowing basis, or roughly 721 million once lease obligations are counted, sits against effectively no interest burden; the company collects interest income instead. Operations generated 1.0 billion dollars in 2025, up from 723 million the year before, and 875 million dollars went back to shareholders through repurchases and dividends. Nothing in the capital structure amplifies a downturn. What the balance sheet cannot do is protect the multiple, and the multiple is where the entire question sits.

Catalysts

The next scheduled information event is second-quarter 2026 results on August 4, 2026. The March quarter, reported May 5, 2026, showed revenue of 2.78 billion dollars, operating income of 294.8 million and diluted earnings of 1.71 dollars a share. The line to watch is ocean, where average sell and buy rates have been falling, and brokerage, where declaration volumes have been rising for reasons that could reverse with a change in tariff policy rather than a change in trade volume.

Capital return is running on a published schedule. On May 4, 2026 the board declared a semi-annual dividend of 81 cents a share, paid June 15, 2026 to holders of record June 1. In the same release the chief executive noted that since 2024 the company has returned close to 2 billion dollars to shareholders through dividends and repurchases. Behind that sits the February 2026 authorisation of a further 3 billion dollar repurchase programme, which begins when the existing plan retires the share count to 130 million.

The structural item to track has no date attached. Red Sea routing determines how much effective ocean capacity exists, and the company has said in writing that a return to normal transit would add capacity and press rates down. Nothing in the reported figures will show that shift until it has already happened to the spread, so the ocean revenue line in the August print is the earliest place it becomes visible.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• CHRW (C.H. ROBINSON WORLDWIDE, INC.)
• FY2025 10-K: …done with each customer by providing them with a full range of logistics services and people on whom they can rely. During 2025, we served 75,000 customers worldwide, ranging from Fortune 100 companies to small businesses in a wide variety of industries. During 2025, our largest customer accounted for approximately…
• FY2025 10-K: …services are provided in connection with providing the freight transportation, based on the nature of the customer relationship. Our breadth of value-added services also includes supply chain consulting and design, analytics, customs brokerage and compliance, project logistics, warehousing, and cargo insurance-for…
• HUBG (HUB GROUP, INC.)
• (no filing in the citation store)

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.