UPDATE 2-Expeditors Q3 profit tops Wall Street; shares surge

* Q3 EPS up 15 percent at $0.39, beats estimates

* Total revenue rises 11 pct

* Shares up as much as 27 percent

* Citigroup rates Expeditors stock at "buy" (Recasts, adds analyst comments, background)

By Eric Yep

BANGALORE, Nov 4 (Reuters) - Global logistics service provider Expeditors International of Washington Inc (EXPD.O) posted better-than-expected quarterly profit, driven by operating margin growth, sending its shares up 27 percent.

Despite slowing freight volumes in the United States, non-asset based logistics companies like Expeditors are seeing improved margins as they are in a better position to bargain for the cheapest rates.

Expeditors is well positioned in the current credit crunch as its balance sheet is free of long-term debt, low capex, excess cash and no foreseeable need to tap the capital markets, Citigroup analyst Matthew Troy said in a note.

Troy initiated Expeditors and its rival C.H. Robinson Worldwide (CHRW.O) with a "buy" rating.

Expeditors' net income rose 15 percent to $85.6 million, while total revenue increased 11 percent to $1.56 billion in the third quarter, largely in line with market expectations.

This revenue growth rate is comparable to global competitors, and "though it is good, it is not extraordinary" as Expeditors is a company that normally grows 15 percent to 20 percent, analyst David Campbell of Thompson, Davis & Co. said.

ASIAN PUSH

Expeditors said operating margin was 31.6 percent for the latest third quarter.

While Asia contributed about 55 percent of the company's total revenue, the United States added 23 percent. Revenue from Asia grew by 3.4 percent to $857.9 million.

Expeditors' asset light model, unlike asset intensive ones of Fedex Corp (FDX.N) or United Parcel Service Inc (UPS.N), work better in downturns because as revenue goes down, so do the costs, analyst Campbell said.

"So percentage-wise earnings hold up a lot better than asset based companies like those in trucking," he added.