ZTO Express (Cayman) Inc (ZTO, Financial), a leading player in the transportation industry, has recently witnessed a significant uptick in its stock performance. Over the past week, the company's stock price has seen a gain of 4.75%, and over the last three months, it has surged by an impressive 21.62%. Currently, ZTO's market capitalization stands at $18.32 billion with a stock price of $22.76. According to GuruFocus's valuation, the stock is modestly undervalued with a GF Value of $29.12, suggesting potential room for growth. This valuation marks a slight increase from three months ago when it was significantly undervalued at a GF Value of $28.80.
Company Overview
ZTO Express is not only China's largest express delivery company by parcel volume but also a pioneer in the network partner model. This model involves ZTO providing line-haul transportation and sorting services, while local partners handle first-mile pickup and last-mile delivery. Founded in 2002 by Meisong Lai, who still leads the company, ZTO has grown to command a 22.1% volume share in 2022. The company's strategic relationship with Alibaba Group, which holds an approximately 11.7% interest, further solidifies its market position. 
Robust Profitability
ZTO's financial health is reflected in its high Profitability Rank of 9/10. The company boasts an Operating Margin of 26.01%, which is superior to 86.61% of its peers. Additionally, its Return on Equity (ROE) of 15.46% and Return on Assets (ROA) of 10.42% both exceed industry averages, standing higher than 72.78% and 87.13% of peers, respectively. The Return on Invested Capital (ROIC) at 11.23% also highlights efficient capital use. Remarkably, ZTO has maintained profitability for the past decade, surpassing 99.9% of its competitors. 
Consistent and Promising Growth
ZTO's growth trajectory is equally impressive, with a Growth Rank of 10/10. The company has consistently increased its revenue and EPS over the past three and five years. Specifically, its 3-Year Revenue Growth Rate per Share stands at 9.80%, and its 5-Year Rate at 14.20%. Future estimates are even more promising, with an expected Total Revenue Growth Rate of 19.00% over the next three to five years. EPS growth is also robust, with a 3-Year Growth Rate of 19.50% and a 5-Year Rate of 11.20%. The estimated future EPS Growth Rate is 14.70%. 
Investor Confidence and Shareholder Composition
Notable investors such as Richard Pzena (Trades, Portfolio), Charles Brandes (Trades, Portfolio), and Ray Dalio (Trades, Portfolio) have significant holdings in ZTO, reflecting strong investor confidence. Pzena holds approximately 5,889,745 shares, Brandes owns 2,450,863 shares, and Dalio has 523,693 shares. Their investments underscore the attractiveness of ZTO's business model and its market position.
Competitive Landscape
When compared to its closest competitors, ZTO stands out. With a market cap of $18.32 billion, it is slightly higher than JB Hunt Transport Services Inc (JBHT, Financial) at $17.38 billion and significantly higher than C.H. Robinson Worldwide Inc (CHRW, Financial) at $9.63 billion. This positioning highlights ZTO's robust market presence and operational scale in the transportation industry.
Conclusion
ZTO Express (Cayman) Inc's recent stock performance is a testament to its strong market position, high profitability, and promising growth prospects. The company's innovative business model and strategic partnerships have positioned it well within the competitive landscape of the transportation industry. With continued investor interest and favorable market conditions, ZTO is well-poised for future success.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
