ZIM Integrated stock price has soared in the past few months, and this trend may continue rising as shipping costs rise. The stock jumped from the year-to-date low of $10.60 in April to $17.5 today.
Shipping costs are soaring
ZIM Integrated’s share price has jumped as shipping costs rise. Drewry data shows that the World Container Index (WCI) has jumped from the year-to-date low of $2,000 to $3,543.
This surge will likely continue rising as investors focus on the ongoing Israel and Iran conflict that could become a full-blown war in the region.
The war has pushed the cost of energy significantly higher, with West Texas Intermediate and Brent crude oil price soaring above $70 today.
ZIM Integrated mostly benefits from rising shipping costs, as they impact its shipping prices. For example, the company went viral during the COVID-19 pandemic as demand pushed prices higher.
As a result, its revenue jumped from near $4 billion in 2020 to over $10.7 billion in the following year. This trend continued and peaked at $12.5 billion in 2022.
ZIM Integrated’s revenue then plunged to $5.16 billion in 2023 as shipping costs plummeted and then rebounded to $8.2 billion last year. Shipping costs averaged over $3,000 for most part of last year.
ZIM will benefit from the higher shipping costs because its business is not highly exposed to the Suez Canal. Most of its business is in the Pacific region, followed by intra-Asia and the Atlantic.
ZIM’s business is doing well
The most recent results showed that ZIM Integrated’s business was doing well, with its revenue soaring by 28% to $2.01 billion.
Its net income jumped by 222% to $296 million, while its adjusted EBITDA rose by 82% to $779 million and adjusted EBIT moved to $463 million.
This profitability helped it to continue paying its dividend. As part of its dividend policy, it pays between 30% and 50% if its quarterly net income to shareholders.
As a result, the company has a dividend yield of about 18%, higher than most companies in the United States. This yield means that, while the stock has dropped by 6.7% in the last 12 months, its total return was almost 50%, higher than the S&P 500 Index’s 10%.
ZIM Integrated’s guidance was that its adjusted EBITDA will be between $1.6 billion and $2.2 billion, and its adjusted EBIT will be between $350 million and $950 million.
There are chances that its payout will be higher than that if the ongoing shipping prices continue rising. That’s because its estimate was based on lower freight rates than last year.
ZIM Integrated stock price analysis
ZIM stock price chart | Source: TradingView
The daily chart shows that the ZIM Integrated share price bottomed at $3.98 in 2023 and then bounced back by over 352% to $17.5.
It has remained above the 50-day and 200-day Exponential Moving Averages (EMA), a sign that bulls are in control.
The Relative Strength Index (RSI) has formed an ascending channel and is nearing the overbought.
Therefore, the stock will likely continue rising as bulls target the key resistance point at $19.8, up by 13% above the current level.
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