May 4, 2022, 12:40 p.m. EDT

Dow transports rally, as Expeditors’ stock surge helps offset Avis Budget’s drag

By Tomi Kilgore

The Dow Jones Transportation Average climbed Wednesday, to buck the weakness seen in the broader stock market, led by a rally in Expeditors International of Washington Inc.’s stock after the air and ocean freight company boosted its dividend and share repurchase plans.

Expeditors’ rally helped offset the selloff in Avis Budget Group Inc.’s stock, which followed the car rental companies first-quarter results.

The Dow transports (DJX:DJT) climbed 0.4%, with 12 of 20 components gaining ground, while its sister index, the Dow Jones Industrial Average (DOW:DJIA) slipped 7 points, or less than 0.1%.

Also, the S&P 500 index (S&P:SPX) dropped 0.3% and the Nasdaq Composite (NASDAQ:COMP) shed 1.0%.

Expeditors’ stock (NAS:EXPD) shot up 6.1% toward a three-month high in midday trading to pace the Dow transports’ gainers. That was on track to be the biggest percentage gain since it ran up 12.9% on March 24, 2020.

The stock’s $6.23 price rise on Wednesday added about 38 points to the Dow transports’ gain.

The company announced late Tuesday a semiannual cash dividend of 67 cents a share, up from a previous payout of 58 cents a share. The new dividend is payable June 15 to shareholders of record on June 1.

Based on the current stock price, the new annual dividend rate implies a dividend yield of 1.23%, which compares with the implied yield for the S&P 500 index (S&P:SPX) of 1.53%.

The company also disclosed a change to its “Discretionary Stock Repurchase Plan,” which now allows for enough repurchases to lower the number of shares outstanding to 150 million shares, down from the previous authorization of 160 million shares

With about 167.4 million shares outstanding as of March 8, according to the company’s annual report, the company could spend roughly $1.9 billion to lower the number to 150.0 million at current prices.

The company said the number of shares it could buy back could increase if the number of outstanding shares increases.

The dividend and buyback announcements came a day after the company reported first-quarter profit and revenue that rose above expectations, according to FactSet, as increased pricing offset year-over-year declines in airfreight tonnage and ocean container volume.

Meanwhile, shares of Avis Budget (NAS:CAR) dove 4.1% in midday trading to pace the Dow transports’ losers, reversing and earlier gain of as much as 5.0%. The stock’s price decline of $11.66 shaved about 71 points off the Dow transports’ price.

The early gain followed the company’s first-quarter report released late Tuesday, in which Avis swung to a profit that was nearly triple what was expected, as revenue jumped 77% with pricing and volume both increasing.

Elsewhere, all six of the Dow transports’ airline components traded lower, led by the 2.7% drop in JetBlue Airways Corp.’s stock. (NAS:JBLU)

Among other air carriers, shares of American Airlines Group Inc. (NAS:AAL) shed 1.6%, Delta Air Lines Inc. (NYS:DAL) dropped 1.5% and United Airlines Holdings Inc. (NAS:UAL) lost 1.5%.

The Dow transports’ other top gainers were shares of transportation management services provider Landstar System Inc. (NAS:LSTR) , which rose 1.6%, railroad operator Norfolk Southern Corp. (NYS:NSC) , which gained 1.5% and trucker J.B. Hunt Transport Services Inc. JBHT , which rallied 1.4%.

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