As transportation stocks like Delta Air Lines DAL and CSX Corporation CSX kick started the Q3 earnings season with positive surprises, all eyes are now glued on the other bigwigs from the sector that are slated to report their quarterly results this week.
The transportation sector (one of the 16 Zacks sectors) is highly diversified in nature. The space includes airlines, truckers, railroads, and shippers, to name a few. Despite the promising start, the overall earnings picture for the transportation space is yet to become clear. We note that the sector is undergoing tough times thanks to a number of headwinds like the upsurge in terror attacks, the Brexit vote, driver shortages and declining coal shipments that have a high probability of limiting bottom-line growth. In fact, the Zacks Earnings Trends report estimates that at end the Q3 earnings season the sector will see earnings declining 19.8% on a year-over-year basis. The bottom-line performance is worse than that in Q2 where it had decreased 12.4%. Nonetheless, the sector has made an encouraging start to the Q3 earnings season with all the transportation companies that have reported their quarterly numbers as of Oct 14 outperforming on the bottom-line front.
With more and more companies slated to release their financial numbers this week, we expect a clearer insight into the performance of the sector. The most notable of these is the Q3 results of Union Pacific Corporation UNP, which holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Meanwhile, let’s take a look at how these three transportation stocks might fare in Q3 when they report their quarterly numbers
Landstar System LSTR is a Jacksonville, FL-based asset-light provider of integrated transportation management solutions across the globe. The company is scheduled to report its Q3 earnings results on Oct 19. According to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase its odds of an earnings surprise. However, Landstar System has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 81 cents. In addition, the company has a Zacks Rank #4 (Sell). As it is, we caution against Sell-rated stocks (Zacks Rank 4 and 5) going into the earnings announcement.
Monaco-based Costamare Inc. CMRE is one of the world's leading owners and providers of containerships for charter. The shipping company has a Zacks Rank #4. Its Earnings ESP currently stands at -2.78% as the Most Accurate estimate is lower than the Zacks Consensus Estimate of 36 cents by a penny. The unfavorable combination makes an earnings beat unlikely. The company is expected to report its Q3 earnings results on Oct 19.
Calgary, Canada-based railroad operator, Canadian Pacific Railway Limited CP has a Zacks Rank #3. Its Earnings ESP currently stands at +0.47% as the Most Accurate estimate is higher than the Zacks Consensus Estimate of $2.12 per share by a penny. The favorable combination makes an earnings beat likely. The company is scheduled to report its Q3 earnings results on Oct 19 (Read more: Canadian Pacific Q3 Earnings: A Beat in the Cards?).
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