Covered call trade on Expeditors International of Washington, Inc. (EXPD).
Expeditors International of Washington, Inc. (EXPD) , today announced that its Board of Directors has declared a semi-annual cash dividend of $.25 per share, payable on December 15, 2011 to shareholders of record as of December 1, 2011.
STRATEGY: Look at the December 2011 42.5 covered call. For each 100 shares of Expeditors International of Washington Inc (EXPD) stock you buy, sell one December 2011 42.5 call option for a 40.85 (43.65 – 2.80) debit or better. That’s potentially a 4.68% assigned return including the dividend.
TECHNICAL: The technicals for EXPD are bullish with a weak upward trend. The stock is under accumulation with support at 45.19. S&P rates this stock 4 STARS (out of five) – buy.
RISK: For those seeking downside protection with a blanket put, buy the May 2012 42.5 Put for 4.10. Sell the put when you exit the covered call trade.
S&P RESEARCH: S&P reiterates buy opinion on shares of Expeditors International (EXPD) . Q3 EPS is $0.50, vs. $0.44, $0.01 ahead of our estimate and Capital IQ consensus. However,$0.03 of EPS came from higher non operating income. Gross revenues were disappointing, but net revenue growth improved on better airfreight margins. We think EXPD did a good job in a difficult operating environment, and believe it remains well positioned for an eventual improvement in shipping demand. We cut our ’11 and ’12 EPS forecasts to $1.80 and $1.98from $1.89 and $2.28. We cut our target price to $60 from $65, 30X our ’12 estimate, in the middle of EXPD’s historical range.