You are probably aware that ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) is a leader in the Marine Shipping space. In this analysis, we are going to look at some of the key financial ratios for ZIM Integrated Shipping Services Ltd. to determine a price prediction for ZIM. Remember these price predictions take into account several assumptions (which I will highlight) to determine a future price. I'll share my ZIM stock price prediction, then show you the approach and assumptions used to calculate the ZIM stock forecast.
Before we go any further, let me start by saying this, stock forecasting is hard. I don't know what the future will hold, and neither do Wall Street Analysts. If they could accurately predict the future, they would be able to beat the S&P 500 and I would be extremely wealthy. What I can say is that we can use available data to determine a reasonable ZIM stock forecast and helps us make better investment decisions, so hopefully, you find this analysis useful.
The ZIM Integrated Shipping Services Ltd. stock price prediction of $175 was derived from 3 main sources of data. I'll dive into the approach to show you how I determined how I “predicted” a stock price of $175 for ZIM
The Financial growth Metrics provide an analytics valuation approach to determining a reasonable ZIM stock forecast. The other two sources of data will be used to adjust the stock price prediction for ZIM. Let's be honest, if you've ever done a valuation exercise on a stock or tried to determine the future price, it is both an art and a science.
For this part of the analysis, I am looking at the history of key financial metrics for ZIM Integrated Shipping Services Ltd. to forecast the stock into 2022 and 2025. Most investors know that historical performance does guarantee future performance, but it is useful to see how ZIM has been trending.
ZIM has experienced a 3 Year Earnings Growth Per Share of 65%. Let's assume that ZIM can continue to grow Revenue and Earnings at a similar rate for the next three years, then we can assume the ZIM stock forecast for 2025 will follow a similar growth trajectory. I recognize there are a lot of other factors but this is a straightforward and solid approach.
With ZIM Earnings Per Share of 28.3 projected out at the 3-year growth rate gives us a future EPS of 82. If the current ZIM Price to Earnings Ratio is 2.11 (and we assume this remains the same) then we determine the ZIM stock forecast by multiple the P/E by the EPS to give us a stock price prediction of $175 per share
There are other ways to predict the price for ZIM but I would argue that P/E, EPS, and Earnings Growth are the most commonly used financial metrics by analysts and investors. This is why I used them to forecast ZIM's stock price.
Analyst Ratings have provided relatively strong indicators of future price movement, which is why they are used to determine a ZIM stock forecast. It can also help you determine if you should buy or sell ZIM There are a total of 11 analyst ratings for ZIM. Here is the current breakdown of analyst ratings:
This breakdown of ratings indicates that Wall Street analysts are overall (Bullish/Bearish) on ZIM Integrated Shipping Services Ltd.. I factored this into the ZIM stock price forecast by using it as direction guidance for the future. If you were to make investment decisions based on just analyst ratings, this would indicate ZIM is a buy.
ZIM's current P/E Ratio is 2.11 and has an ROE of 2.13. I would consider this a good P/E and ROE for ZIM Integrated Shipping Services Ltd.. These ratios in isolation provide some insights, but it is better to understand them in content for both ZIM and the sector. Utradea provides a PE, ROE, and DCF rating for stocks ranked between 1 (very poor) and 5 (very strong). Without having to go through the calculations, this provides me with a reasonable view of if these key metrics for ZIM Integrated Shipping Services Ltd. are good or bad from an investment perspective. Here is a breakdown of the ratings
A DCF rating of 5 - Very Strong
A PE rating of 4 - Strong
An ROE rating of 5 - Very Strong
Based on the actual PE and ROE, along with the metric ratings, I would say that the ZIM forecast is reasonable.
Should you buy ZIM? Well, based on the ZIM stock forecast of $175 per share, the underlying analysis, and the current price of ZIM, I would agree with the analysts and say ZIM is a buy. I think this is probably a conservative price target for ZIM considering the rapid growth it experienced over the last 2 years. Though as a company becomes larger, the growth rate tends to drop off.
Let me know what you think, happy to dive into other aspects of ZIM to help you make an informed investment decision.