ZIM is an Israeli shipping company which ships goods around the world. With a market cap of $2.1 billion, Zim is a medium cap stock.
What really caught my eye is its insanely low P/E ratio of 0.36. With earnings of over $3 billion, the company actually earns more than the market says that it's worth. Now the shipping container business isn't exactly a high growth industry, so low P/E ratios are common but this is something else. The company also has a profit margin of over 30% and even has an insanely high dividend.
https://www.marketbeat.com/market-data/low-pe-stocks/
I can't be exactly sure why this is so I'll give as much context as I can. Two years ago, the stock was at $12.05. From then to March 18, 2022, it went up to $84.50, a 601.24% increase. But it then saw a 79.25% decline to $17.53. My best guess for this is that shipping rates skyrocketed in the aftermath of Covid but afterwards, went back down to where they were before.
I get pessimism over shipping prices but it really feels like the market overshot its correction when the company is still bringing in over $3 billion.
As for the insanely high yield, it looks very beguiling but if Ycharts is anything to go by, the company didn't have any yield prior to a year ago. At the stock peak, the yield was 2.92%. After that, the yield skyrocketed. It seems more like the company decided to keep the dollars per share constant. so as the stock price fell, the yield got bigger and bigger. Obviously, if the stock price rises, the yield will have to drop.
https://ycharts.com/companies/ZIM/dividend_yield
My overall opinion is that from a value investor standpoint, Zim is an absolute steal. Warren Buffett once said to be fearful when others are greedy and greedy when others are fearful. With overall good fundamentals, the Buffett advice would be to be very greedy. As for the dividend, it seems like a yield trap. I wouldn't let the yield be the reason to buy this stock (there are more stable options available like Mercedes).
If you have any insight to add, that would be great. Is it a buy, sell, or hold?
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