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Transport Stocks' Q2 Earnings on Aug 11: TRTN, KNOP, ESEA

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The Q2 earnings season is coming to a close with 433 S&P 500 members (accounting for 87.7% in terms of market capitalization) having reported their quarterly numbers, as per the latest Earnings Preview report (data as of Aug 5). The quarterly releases so far highlight an improvement over the preceding quarter’s results. Per the report, the bottom line for the S&P 500 players is expected to contract 3.5% year over year in Q2 as against the earnings contraction of 6.5% witnessed in the prior quarter. A steady improvement has been noticed in the top line as well, with estimations pegged at a 0.4% decline for Q2. Revenues had contracted 0.9% in the preceding quarter.

Despite the improved scenario, earnings are expected to decline for the fifth consecutive time this quarter. As has been the case over the past few quarters, the biggest drag on the bottom line has come from the Energy sector with sectoral earnings expected to contract 78.9% in Q2. The report suggests that six of the 16 Zacks sectors are expected to end Q2 with negative earnings growth.

One of those six sectors is the widely diversified Transportation space which has already seen quarterly reports from all of its S&P 500 members. Given the number of headwinds facing the sector participants, like the surge in terror attacks, declining coal shipments, uncertainty following the Brexit vote and the spread of the Zika virus to Florida, it is no surprise that this sector has posted a weaker quarter in comparison to 1Q16. Transportation earnings growth (in the S&P 500 space) is a dismal -12.4% this earnings season as against +3.3% in 1Q16. The top line has shrunk 1.3% in Q2 compared with a deceleration of only 0.9% in 1Q16.

Meanwhile, there are a few non-S&P 500 members that are yet to unveil their quarterly numbers. Below, we highlight three such transportation companies which are scheduled to report second-quarter results on Aug 11.

Triton International Limited came into existence in Jul 2016 following the merger of Triton Container International Limited and TAL International Group. The company is a lessor of intermodal containers and chassis. 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 the odds of an earnings surprise. However, Triton International has an Earnings ESP of -12.50% as the Most Accurate estimate is 3 cents below the Zacks Consensus Estimate of 24 cents. Also, the company has a Zacks Rank #5 (Strong Sell). Please note that we caution against Sell-rated stocks going into the earnings announcement.

TRITON INTL LTD Price and EPS Surprise

TRITON INTL LTD Price and EPS Surprise | TRITON INTL LTD Quote

KNOT Offshore Partners LP (KNOP - Free Report) owns a portfolio of shuttle tankers that carry oil from offshore platforms to processing facilities. These tankers operate under long-term charters in the North Sea and Brazil. The company has a Zacks Rank #3. However, its Earnings ESP of 0.00% (the Most Accurate estimate is in line with the Zacks Consensus Estimate of 43 cents) acts as a spoiler and makes an earnings beat unlikely.

KNOT OFFSHOR LP Price and EPS Surprise

KNOT OFFSHOR LP Price and EPS Surprise | KNOT OFFSHOR LP Quote

Euroseas Ltd. (ESEA - Free Report) , based in Greece, operates in the dry cargo, drybulk and container shipping markets. The company carries a Zacks Rank #3. However, its Earnings ESP of 0.00% (the Most Accurate estimate is in line with the Zacks Consensus Estimate) dims possibilities of an earnings beat.

EUROSEAS LTD Price and EPS Surprise

EUROSEAS LTD Price and EPS Surprise | EUROSEAS LTD Quote

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