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The Zacks Analyst Blog Highlights United Parcel Service, Norfolk Southern, Union Pacific, Southwest Airlines and American Airlines

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For Immediate Release

Chicago, IL – April 23, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: United Parcel Service (UPS - Free Report) , Norfolk Southern (NSC - Free Report) , Union Pacific (UNP - Free Report) , Southwest Airlines (LUV - Free Report) and American Airlines (AAL - Free Report) .

Here are highlights from Monday’s Analyst Blog:

What Do Q1 Earnings Have in Store for These 5 Transportation Stocks?

The Zacks Transportation sector is widely diversified. It houses airlines, railroads, shipping and trucking companies to name a few.

Improvement in the demand scenario from the pandemic lows is a major positive. The uptick in trading volumes is likely to have aided the performance of transportation companies in the soon-to-be-reported quarter.

However, high fuel costs are likely to have hurt the first-quarter performance of transportation companies. Fuel expenses represent a key input cost for any transportation player. High oil prices are resulting in an increase in fuel costs. In first-quarter 2024, oil prices increased 16%.

The transportation sector has also been plagued by a labor crisis, due to which costs are on the rise. High labor costs are also expected to have impacted the bottom-line numbers in the to-be-reported quarter.

Against this backdrop, investors interested in the Zacks Transportation sector are keenly waiting for the results of United Parcel Service, Norfolk Southern, Union Pacific, Southwest Airlines and American Airlines, scheduled to be released during the course of this week.

Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Let's delve deeper.

UPS' bottom-line performance in the quarter under review is likely to have been hurt by high labor costs. The labor deal inked with International Brotherhood of Teamsters last year is likely to have increased labor costs. High fuel costs are expected to have affected the bottom line as well.

Apart from the adverse effects of labor negotiations, weakening demand due to economic slowdown is expected to have resulted in a decline in the volume of packages shipped. UPS is scheduled to release first-quarter 2024 results on Apr 23.

Our proven model does not conclusively predict an earnings beat for UPS this earnings season as it has an Earnings ESP of -3.24% and a Zacks Rank #3 at present. The readings were the same when the first-quarter 2024 earnings preview article was issued. You can see the complete list of today's Zacks #1 Rank stocks here

We expect Norfolk Southern's performance to have been affected by soft revenues due to weak freight demand. Softness in overall volumes due to headwinds like weak freight conditions, supply-chain woes and slower network velocity are likely to have hurt the top line.

Our proven model does not conclusively predict an earnings beat for NSC this earnings season. NSC has an Earnings ESP of -0.45% and a Zacks Rank #3 at present. When the first-quarter 2024 earnings preview article was issued, NSC had an Earnings ESP of -0.31% and a Zacks Rank #3. NSC is scheduled to release first-quarter 2024 results on Apr 24.

Like Norfolk Southern, Union Pacific's performance is also likely to have been affected by soft revenues due to weak freight demand. Freight revenues account for the bulk of the top line. We expect freight revenues in the first quarter of 2024 to decrease 2.4% from the fourth-quarter 2023 actuals.

Our proven model does not conclusively predict an earnings beat for UNP this earnings season as the company has an Earnings ESP of -0.81% and a Zacks Rank #3 at present. When the first-quarter 2024 earnings preview article was issued, UNP had an Earnings ESP of +0.61% and a Zacks Rank #3. UNP is scheduled to release first-quarter 2024 results on Apr 24.

We expect Southwest Airlines' performance in first-quarter 2024 to have been aided by healthy air travel demand and yield strength. However, high fuel and labor costs are likely to have been the major negatives.

Our proven model predicts an earnings beat for LUV this earnings season as the airline has an Earnings ESP of +2.14% and a Zacks Rank #3 at present. The readings were the same when the first-quarter 2024 earnings preview article was issued. LUV is scheduled to release first-quarter 2024 results on Apr 25.

We expect upbeat air travel demand, particularly on the domestic front, to have boosted American Airlines' top-line performance in the to-be-reported quarter. Passenger revenues, which account for the bulk of the top line, are likely to have been high, strengthening total revenues. Per our model, passenger revenues in the first quarter of 2024 are likely to have increased 2.5% from the first-quarter 2023 actuals.

Our proven model predicts an earnings beat for AAL this earnings season as the airline has an Earnings ESP of +6.51% and a Zacks Rank #3 at present. The readings were the same when the first-quarter 2024 earnings preview article was issued. AAL is scheduled to release first-quarter 2024 results on Apr 25.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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