Dow Transportation recovers, as soaring Expeditors stocks help offset Avis Budget drag

The Dow Jones Transportation Average climbed on Wednesday, countering weakness seen in the broader stock market, led by a rally in shares of Expeditors International of Washington Inc. after the air and ocean freight company stepped up plans to redemption of dividends and shares.

Expeditors’ rally helped offset a sell-off in Avis Budget Group Inc. shares, which trailed the rental car companies’ first-quarter results.

The Dow carries DJT,
-1.21%
climbed 0.4%, with 12 of the 20 components gaining ground, while its sister index, the Dow Jones Industrial Average DJIA,
-0.30%
slipped 7 points, or less than 0.1%.

Also, the S&P 500 SPX index,
-0.57%
fell 0.3% and the Nasdaq Composite COMP,
-1.40%
lose 1.0%.

EXPD Shippers Stock,
-0.93%
climbed 6.1% to a three-month high in midday trading to pace Dow Jones transportation gainers. It was on track to be the biggest percentage gain since rising 12.9% on March 24, 2020.

Wednesday’s $6.23 share price rise added about 38 points to Dow Jones Transportation’s gain.

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

Based on the current share price, the new annual dividend rate implies a dividend yield of 1.23%, which compares to the implied yield of the S&P 500 SPX Index,
-0.57%
by 1.53%.

The company also announced a change to its “discretionary stock buyback plan”, which now allows enough buybacks to reduce 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 about $1.9 billion to reduce the number to 150.0 million at current prices.

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

The dividend and buyout announcements came a day after the company announced first quarter profit and revenue which beat expectations, according to FactSet, as higher prices offset year-over-year declines in air freight tonnage and ocean container volume.

Meanwhile, the actions of Avis Budget CAR,
-6.52%
plunged 4.1% in midday trading to trail losers in Dow transports, reversing and gaining as much as 5.0% earlier. The stock price decline of $11.66 shaved about 71 points off the Dow Transport price.

The early gain followed the company’s first quarter report released on Tuesday evening, in which Avis posted a profit that was almost triple what was expected, as revenue jumped 77% with prices rising and volume.

Elsewhere, the six airline components of Dow Transportation traded lower, led by the 2.7% drop in shares of JetBlue Airways Corp. JBLU,
-3.10%

Among other air carriers, shares of American Airlines Group Inc. AAL,
-3.78%
lost 1.6%, Delta Air Lines Inc. DAL,
-2.68%
fell 1.5% and United Airlines Holdings Inc. UAL,
-2.82%
lost 1.5%.

Other top Dow transportation gainers were shares of transportation management services provider Landstar System Inc. LSTR,
-1.05%,
which rose 1.6%, rail operator Norfolk Southern Corp. NSC,
-0.44%,
which gained 1.5% and trucker JB Hunt Transport Services Inc. JBHT, which gained 1.4%.

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