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Railroad Stocks Q1 Earnings to Watch on Apr 19: CSX, CP

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The Q1 earnings season is in the nascent stage with 31 S&P 500 participants having reported results so far. The season has started on a strong note courtesy of earnings beats from big names in the banking space like JPMorgan Chase & Co. (JPM - Free Report) . This week is going to an extremely busy one with several companies reporting their quarterly results. This week alone will see 177 companies, including 61 S&P 500 participants, revealing their Q1 numbers.

The transportation sector (one of the 16 Zacks sectors) too is off to a strong start with key sector participants like Delta Air Lines (DAL - Free Report) and United Continental Holdings (UAL - Free Report) reporting better than expected earnings. The sector, which is projected to end Q1 on a sorry note with its bottom-line contracting 21.7% as per the latest Earnings Preview, is a highly diversified one. Apart from airline companies, it also includes shippers, trucking companies and railroads to name a few.

Railroads, which have been on a high since the victory of Donald Trump as US president, form an important part of the transportation sector. The optimism surrounding the sector can be gauged from the fact that the Zacks categorized Transportation- Rail industry has outperformed the S&P 500 index since Nov 8.  The industry has gained 17.14%, compared with the S&P 500’s gain of 8.2%.

Against this backdrop, investors will keenly await earnings reports of key railroads companies like CSX Corporation (CSX - Free Report) and Canadian Pacific Railway Limited (CP - Free Report) on Apr 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

In this context, the Jacksonville, FL-based, CSX Corporation’s Zacks Rank #2 (Buy) and an Earnings ESP of +2.33%, makes us reasonably confident of an earnings beat in Q1 (Read more: CSX Corporation Q1 Earnings: Is a Beat in the Cards?).

CSX Corporation Price and EPS Surprise

 

CSX Corporation Price and EPS Surprise | CSX Corporation Quote

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, our quantitative model does not conclusively show an earnings beat for the Calgary, Canada-based Canadian Pacific Railway Limited in the Q1. This is because the company currently has a Zacks Rank #3 and an Earnings ESP of -2.11% (Most Accurate estimate of $1.86 is 4 cents below the Zacks Consensus Estimate).

Previously too, our model did not conclusively show an earnings beat as the Earnings ESP was -1.05%. The Zacks Rank was the same (Read more: Canadian Pacific Q1 Earnings: What's in the Cards?).


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