Breaking Down Expeditors International of Washington, Inc. (EXPD) Financial Health: Key Insights for Investors

You're looking at Expeditors International of Washington, Inc. (EXPD) right now, trying to figure out if the logistics giant can keep its margins clean while the freight market is a mess. Honestly, the third quarter of 2025 was a textbook example of a mixed bag, but it's defintely not a disaster. The headline is that they beat on the bottom line, delivering diluted earnings per share (EPS) of $1.64, which was a 1% increase year-over-year and comfortably ahead of analyst estimates, but revenue still dipped 4% to $2.9 billion. Here's the quick math: they are managing the cost side well, evidenced by the slight EPS increase despite a revenue drop and a 3% decrease in net earnings to $222 million. The real story is the split: airfreight tonnage grew 4%, boosted by technology clients investing in artificial intelligence (AI) infrastructure, but ocean container volume fell 3% due to pricing volatility. This divergence shows a company playing defense in some areas while capitalizing on high-value, strategic segments-and with a full-year EPS consensus around $5.85, you need to see exactly how they plan to turn that segment strength into broader, sustainable growth.

Revenue Analysis

You want to know if Expeditors International of Washington, Inc. (EXPD) is still a solid investment, and the revenue picture for 2025 is a mixed bag, showing resilience in high-margin services but contraction in core freight. The company's trailing twelve months (TTM) revenue ending September 30, 2025, stood at a strong $11.17 billion, reflecting a significant recovery from the 2023 trough. But, the near-term volatility is clear: Q3 2025 revenue was $2.89 billion, a 4% decline compared to the same quarter last year. This tells you the market is defintely still normalizing after the pandemic-era logistics boom.

The primary revenue streams for Expeditors International of Washington, Inc. are its three core service segments: Airfreight Services, Ocean Freight and Services, and Customs Brokerage and Other Services. This non-asset-based model-meaning they don't own the planes or ships-allows them to quickly adjust to market shifts, which is a key competitive advantage in a volatile global trade environment.

Here's the quick math on how each segment contributed to the Q3 2025 top line:

• Customs Brokerage and Other Services: The largest contributor, driving $1.13 billion in revenue.
• Airfreight Services: Generated $1.02 billion in revenue.
• Ocean Freight and Services: Brought in $746.1 million.

The most telling shift is the segment contribution. For the first time in a while, the Customs Brokerage and Other Services segment became the largest revenue source in Q3 2025, accounting for about 39.1% of total revenue. This is a direct result of increased demand for cross-border expertise amid complex geopolitical dynamics and shifting trade policies, like those impacting the US de minimis exemption.

The year-over-year revenue growth rate, or rather, the decline, highlights the pressure on freight rates. While total Q3 2025 revenue fell by 4% year-over-year, the underlying segment performance shows a clear divergence.

What this estimate hides is the airfreight volume-tonnage increased by 4% in Q3 2025-which is good, but the revenue growth was minimal because buy and sell rates are still volatile. Conversely, ocean container volume decreased by 3%, and the segment revenue dropped sharply due to pricing volatility, a direct consequence of overcapacity and importers pulling forward orders ahead of anticipated tariffs. This reliance on high-margin, fee-based services like customs brokerage is a deliberate strategy to balance the overall portfolio performance when freight rates are unpredictable. For a deeper look at the long-term strategic direction, you can review the Mission Statement, Vision, & Core Values of Expeditors International of Washington, Inc. (EXPD).

Finance: Monitor the customs brokerage and other services segment's contribution; if it consistently exceeds 40% of total revenue in Q4, the diversification strategy is working better than expected to offset freight volatility.

Profitability Metrics

You need to know if Expeditors International of Washington, Inc. (EXPD) is making money efficiently, especially in a volatile logistics market. The direct takeaway is that while the company's profitability margins are consistently strong for a non-asset-based freight forwarder, they are showing near-term compression due to softening freight rates and a focus on cost alignment in a lower-growth environment.

Looking at the most recent quarter, Q3 2025, the company's gross profit margin held steady, but the operating and net margins saw a slight dip year-over-year. This is a common story in logistics right now: revenue is falling from the pandemic-era highs, but EXPD's disciplined cost structure is cushioning the blow. Here's the quick math for Q3 2025, based on revenues of $2.9 billion:

• Gross Profit Margin: 13.20% (Gross Profit of $382 million)
• Operating Profit Margin: 9.93% (Operating Income of $288 million)
• Net Profit Margin: 7.66% (Net Earnings of $222 million)

Margin Trends and Operational Efficiency

Expeditors International of Washington, Inc.'s gross margin-the money left over after paying the direct cost of transportation-is a key indicator of its operational efficiency and pricing power. Historically, their gross margin has been remarkably consistent, typically hovering between 12% and 14% over the last decade. The Q3 2025 margin of 13.20% falls right in that sweet spot, showing they are managing the spread between buy and sell rates (the difference between what they charge customers and what they pay carriers) well, even as ocean freight pricing remains volatile.

However, the trend in the operating and net margins tells a story of market headwinds. In Q3 2025, operating income and revenues both saw a 4% decline compared to the prior year, and net earnings decreased by 3%. The company is actively focusing on aligning its operating cost structure with this lower-growth environment, which is a smart, realist move to sustain profitability. They are not letting their costs balloon ahead of their volumes, which is defintely a positive sign of management discipline.

Industry Comparison: EXPD vs. Peers

When you compare EXPD's profitability ratios to the broader logistics and air cargo industry, you see a significant difference that highlights their non-asset-based business model (freight forwarding). Freight forwarders have lower revenue and gross margins than asset-heavy carriers (like airlines or shipping lines) but often boast higher operating and net margins because they don't carry the massive capital costs of owning planes or ships.

For context, the global air cargo industry is expected to see a 2025 net profit margin of around 3.6% and an operating margin of 6.7%. Expeditors International of Washington, Inc.'s TTM (Trailing Twelve Months) net profit margin of 7.57% and operating margin of 9.87% as of late 2025 show a clear premium over the general industry average. This is the advantage of being an asset-light orchestrator: you capture a smaller piece of a much larger revenue pie, but you keep a larger percentage of that piece as profit.

Here is a snapshot of the key profitability ratios for the most recent quarter:

What this estimate hides is the extreme volatility in buy and sell rates, which is the biggest near-term risk. The company's success depends on its ability to quickly adjust its pricing to maintain that 13% gross margin, which they have done well so far. For a more complete picture, check out the full analysis at Breaking Down Expeditors International of Washington, Inc. (EXPD) Financial Health: Key Insights for Investors. Your next step should be to monitor their Q4 2025 guidance for any shifts in their cost-alignment strategy.

Debt vs. Equity Structure

You're looking at Expeditors International of Washington, Inc. (EXPD) and trying to figure out if their growth is built on a solid foundation or a mountain of debt. The direct takeaway is this: Expeditors has one of the cleanest balance sheets in the logistics sector, relying overwhelmingly on retained earnings and equity, not debt, to fund its operations and growth.

This is a non-asset-based business model in action. They don't own the ships or the planes, so they don't need the massive capital expenditure (CapEx) that asset-heavy competitors do. This is a huge advantage in a volatile market.

Debt vs. Equity: How Expeditors International of Washington, Inc. (EXPD) Finances Its Growth

Expeditors' financing strategy is defintely conservative and equity-heavy. As of the third quarter of 2025, their total debt-which includes both short-term and long-term obligations-was approximately $560 million, with the majority of this being capital lease obligations and current liabilities, not traditional corporate bonds. This is a tiny fraction of their overall capitalization.

Here's the quick math on their capital structure as of September 2025:

• Short-Term Debt & Capital Lease Obligation: $111 Million
• Long-Term Debt & Capital Lease Obligation: $449 Million
• Total Stockholders Equity: $2,280 Million

The company maintains a substantial cash hoard, estimated at around $1.5 billion in Q1 2025, which gives them a significant net cash position (cash minus debt). They can literally pay off all their debt obligations with the cash on hand and still have close to a billion dollars left over. That's financial flexibility.

Debt-to-Equity Ratio: A Clear Advantage

The Debt-to-Equity (D/E) ratio is the clearest measure of this strength. This ratio tells you how much debt a company uses to finance its assets relative to the value provided by its shareholders' equity. For Expeditors International of Washington, Inc., the D/E ratio as of September 2025 stood at just 0.25.

To be fair, a low D/E ratio is typical for asset-light freight forwarders, but Expeditors is low even by industry standards. The average D/E ratio for the US Integrated Freight & Logistics industry is much higher, sitting around 0.63 as of November 2025.

This comparison is stark:

This tiny ratio means that for every dollar of equity, Expeditors uses only 25 cents of debt. The industry average uses 63 cents. This low leverage is why the company is often described as having a strong financial position-it's simply not exposed to the same interest rate risk as its more leveraged peers. This is a fortress balance sheet.

Debt Activity and Capital Allocation

Expeditors has not announced any major debt issuances or refinancing activity in 2025 because they don't need to. Their Q1 2025 results did show minor activity, such as $195 thousand in net proceeds on borrowings on lines of credit, but this is negligible in the context of their total capital. Instead of debt, the company's capital allocation strategy focuses heavily on two things: internal investment (like technology and cybersecurity) and returning capital to shareholders.

The company balances its funding entirely on internal cash generation and equity. They use their strong operating cash flow-which was $343 million in Q1 2025 alone-to fund stock repurchases and dividends, not to service high-interest debt. For a deeper dive into who is buying and why, you should check out Exploring Expeditors International of Washington, Inc. (EXPD) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if Expeditors International of Washington, Inc. (EXPD) can cover its short-term bills, especially in a volatile logistics market. The short answer is a definitive yes: the company's liquidity position is exceptionally strong, backed by high cash reserves and zero long-term debt. This financial discipline is a hallmark of a seasoned, trend-aware management team.

For the third quarter of 2025 (Q3 2025), the company's liquidity positions-measured by the Current Ratio and Quick Ratio-show a healthy buffer. The Current Ratio for EXPD stood at 1.79 as of September 30, 2025. This means the company has $1.79 in current assets for every dollar of current liabilities, a figure that is defintely above the 1.0 baseline and generally considered strong for the transportation sector. Because Expeditors is a non-asset-based freight forwarder, meaning it owns very little inventory, the Quick Ratio (or acid-test ratio) is essentially the same as the Current Ratio. This tells you that nearly all of its current assets are highly liquid, primarily cash and accounts receivable.

Analysis of Working Capital Trends

The company's working capital-the difference between current assets and current liabilities-is substantial, giving it significant financial flexibility. Here's the quick math for Q3 2025: Total Current Assets of $3,675 million less Total Current Liabilities of $2,048 million results in net working capital of approximately $1,627 million.

This large working capital balance, combined with a cash and cash equivalents balance of $1,190 million as of Q3 2025, provides a powerful defense against market downturns or unexpected spikes in operational costs, like air or ocean freight rates. This is a crucial strength in an unpredictable global trade environment.

• Working Capital: $1,627 million.
• Current Ratio: 1.79.
• Cash Position: $1.19 billion in cash and equivalents.

Cash Flow Statements Overview

Looking at the cash flow statement reveals how Expeditors International of Washington, Inc. generates and uses its cash. This is where you see the real operational strength.

The company consistently generates strong Cash Flow from Operating Activities, which is the lifeblood of any logistics business. This operating cash flow supports their capital allocation strategy, which is heavily weighted toward shareholder returns and minimal capital expenditures (CapEx).

On the Investing Cash Flow front, the company is a light spender. Total anticipated capital expenditures for the entire 2025 fiscal year are estimated to be only about $60 million, primarily for technology investments and routine property improvements. This low CapEx is typical for a non-asset-based model and means more cash remains available for other purposes.

For Financing Cash Flow in Q3 2025, the company used $150 million of cash, primarily to return capital to shareholders. Year-to-date through Q3 2025, Expeditors has returned a total of $725 million to shareholders in the form of share repurchases and dividends. This aggressive shareholder return policy is only possible because of the consistent, high-margin operating cash flow.

Potential Liquidity Strengths

Honesty, the main takeaway here is the sheer quality of the balance sheet. Expeditors International of Washington, Inc. has zero long-term debt on its balance sheet, a rarity for a company of its size and a massive liquidity strength. [cite: 16 (from first search)] This means there are no looming principal payments or significant interest expenses to service, making the cash flow extremely stable. You can read more about their core philosophy here: Mission Statement, Vision, & Core Values of Expeditors International of Washington, Inc. (EXPD). The lack of debt and the high current ratio effectively eliminate any near-term liquidity concerns.

Valuation Analysis

You're looking for a clear answer on Expeditors International of Washington, Inc. (EXPD) valuation: is it a buy, hold, or sell right now? The quick answer is that the market is pricing the stock at a premium to its intrinsic value based on analyst consensus, suggesting a 'Hold' or 'Reduce' rating, but its recent momentum is strong.

As a seasoned analyst, I focus on the core valuation multiples to map out the current picture. For a logistics company like EXPD, we need to look past the volatile freight market and see what investors are willing to pay for its earnings, book assets, and operational cash flow (EBITDA).

• Price-to-Earnings (P/E) is high at about 24.85x.
• Price-to-Book (P/B) is elevated at 7.1x (LTM).
• Enterprise Value-to-EBITDA (EV/EBITDA) is 15.10x.

Here's the quick math: The P/E ratio of 24.85x is significantly higher than the logistics industry average of around 15.9x, indicating the market expects substantial future growth or is pricing in the company's asset-light, high-margin business model. The P/B ratio of 7.1x is also high, especially compared to the Industrials sector average of 1.8x, which is a clear signal that the company's value is tied more to its brand, network, and operational efficiency than to its physical assets.

Stock Performance and Analyst Sentiment

The stock's recent performance has been defintely bullish. Over the last 12 months, Expeditors International of Washington, Inc.'s stock price has climbed by over 16.29%. The 52-week trading range shows a low of $100.47 and a recent high of $143.02, with the stock closing near $138.30 on November 20, 2025.

But still, the analyst community is mixed. The consensus rating is a 'Hold' or 'Reduce,' based on a breakdown of ratings from multiple firms: one Strong Buy, one Buy, seven Holds, and three Sells. The average 1-year price target is approximately $131.89, which is actually below the current trading price. This implies that many analysts believe the stock is currently overbought or fully valued at its November 2025 price.

Dividend Profile: Stability Over Yield

Expeditors International of Washington, Inc. is a dividend payer, but you aren't buying it for a high yield. The annual dividend per share is around $1.54, which translates to a modest dividend yield of about 1.09%. The payout ratio is very healthy at approximately 25.12%, meaning the company is using only a quarter of its earnings to pay dividends. This low payout ratio suggests the dividend is safe and leaves plenty of capital for share buybacks or strategic investments, which is a sign of financial strength.

For a deeper dive into the company's strategic foundation, you should review its Mission Statement, Vision, & Core Values of Expeditors International of Washington, Inc. (EXPD).

To summarize the core data points for your decision-making:

Risk Factors

You're looking at Expeditors International of Washington, Inc. (EXPD) because of its non-asset-based model, which offers a lot of flexibility, but you need to be a trend-aware realist about the risks. The core challenge for EXPD right now isn't a balance sheet issue-they are debt-free with $2.197 billion in equity as of Q2 2025-it's navigating a volatile global trade environment where revenue growth is hard to come by.

The biggest near-term risks are external, specifically the geopolitical and market conditions that directly impact freight volumes and pricing. The company's Q3 2025 revenue dropped 4% to $2.9 billion year-over-year, and operating income also fell 4% to $288 million, a clear signal of market headwinds.

Here's the quick math: when global trade slows, EXPD's business slows. Analysts are projecting a 1.1% annual decline in earnings over the next three years, which tells you the market is defintely cautious about a quick rebound in global freight volumes.

• Geopolitical Instability: Unpredictable tariffs, like the on-and-off shifts seen in 2025, force customers to re-evaluate supply chains, creating volume volatility.
• Rate Volatility: Average buy and sell rates for both air and ocean freight remain highly volatile, making it tough to maintain the company's historical unitary profitability (the profit per shipment).
• Regulatory Complexity: Customs clearances are becoming more complex, requiring greater skill and potentially slowing down the process, which is an operational risk.
• Tax Rate Hike: The effective tax rate rose from 25.8% to 28.7% in Q2 2025, driven by foreign exchange rates and non-deductible expenses, directly dragging on net income growth.

The company is very aware of these pressures, and their mitigation strategies are focused on what they can control: operational efficiency and customer service. They are leveraging their non-asset-based model to quickly adapt to the unpredictable environment.

Expeditors is actively employing a strategy of 'pull-forward' demand planning to help customers navigate tariff shifts, essentially getting shipments out ahead of new trade deadlines. They are also focusing on organic growth by increasing efficiency and optimizing customer service across their global network. For long-term resilience, they are building supply chain diversification, which means encouraging multi-shoring (sourcing from multiple countries) and enhancing geopolitical risk assessment for clients. This is smart because it helps their customers, which ultimately helps them. You can read more about this in the full post: Breaking Down Expeditors International of Washington, Inc. (EXPD) Financial Health: Key Insights for Investors.

Still, the financial risk of rising costs is real. In Q2 2025, operating expenses increased 12% and salaries rose 13%, which outpaced the 9% revenue increase in that quarter. This cost growth, coupled with declining revenue in Q3, puts pressure on margins, even with strong operational discipline. You need to watch the ratio of expense growth to revenue growth closely.

Growth Opportunities

If you're looking for a logistics play that can defintely navigate global volatility, Expeditors International of Washington, Inc. (EXPD) presents a compelling case, but you need to understand the shift from volume-driven growth to margin protection. The company's financial health remains robust, evidenced by a trailing twelve months (T12M) revenue ending September 30, 2025, of over $11.17 billion, representing a solid 19.8% year-over-year growth, showing its ability to capture market share in a complex environment.

The core of Expeditors' future growth isn't just about moving more boxes; it's about moving higher-value, more complex freight and services. We saw this in the second quarter of 2025, where Airfreight Services revenue jumped 11% to $952 million, largely fueled by technology customers and a surge in e-commerce business. Plus, the Customs Brokerage and Other Services segment, a high-margin area, is expanding significantly as global trade policies-like the on-and-off tariffs-become more complex, requiring their specialized expertise.

The company's strategic playbook is clear and focuses on operational excellence and financial discipline:

• Maximize operational performance for organic growth.
• Invest in technology to enhance global network efficiency.
• Return capital via share repurchases and dividends.
• Adapt to volatile markets with a flexible, non-asset-based model.

The true competitive advantage for Expeditors is its non-asset-based business model-meaning they don't own the planes or ships-which allows them to be incredibly flexible, a critical trait when supply chains are constantly disrupted. This model, combined with an estimated cash position of approximately $1.5 billion and virtually no significant debt as of Q1 2025, gives them immense financial flexibility to weather any storm or seize acquisition opportunities. Their global network and sophisticated IT systems are the glue, ensuring they can process increasingly complex customs clearances, which is a key differentiator. You can learn more about their long-term vision in their Mission Statement, Vision, & Core Values of Expeditors International of Washington, Inc. (EXPD).

Here's the quick math on their recent performance, showing the strength of their execution:

Still, as a realist, you must acknowledge the near-term headwinds. While 2025 was strong, analysts are projecting a contraction in 2026, with consensus revenue estimates at $10.9 billion, a discernible decline of 2.3% from the T12M figure, and EPS expected to decrease 5.7% to $5.95. This is a reflection of a normalizing freight market and economic uncertainty, not a structural failure. What this estimate hides is the potential for their high-margin customs brokerage to offset some of the rate compression in core freight forwarding, but it means the focus shifts from top-line growth to maintaining a strong operating margin, which was steady at 10% in Q3 2025.

To be fair, the company is actively managing this cycle. For your next step, you should track the growth rate of their Customs Brokerage and Other Services segment revenue in the Q4 2025 report; if that segment continues to expand its share of total revenue, it's a clear signal that the strategic pivot to higher-margin, less cyclical services is working, even as freight rates soften.