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What's in Store for Covenant Logistics (CVLG) in Q3 Earnings?

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Covenant Logistics (CVLG - Free Report) is slated to release third-quarter 2021 results on Oct 20, after market close.

The trucking company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average being 33.1%.

The Zacks Consensus Estimate for the September-quarter earnings per share has increased 1% to $1 over the past 60 days.

Against this backdrop, let’s take a look at the factors that might have shaped the company’s September-quarter performance.

We expect Covenant Logistics’ third-quarter 2021 performance to have been hurt by the spike in COVID-19 cases induced by the Delta variant, particularly in July in the United States. Due to the Delta variant-led supply-chain woes, shipment volumes dipped 3.1% month over month  in July. Hurricane Ida-induced disruptions are also likely to have affected the third-quarter performance.

However, with the COVID-19 cases declining, freight revenues are again improving. Evidently, the Zacks Consensus Estimate for third-quarter freight revenues (excluding fuel surcharge revenues) is currently pegged at $234 million, implying a roughly 1% increase from the figure reported in second-quarter 2021.

The company’s cost-control efforts are likely to have aided its bottom line in the September quarter. Mainly owing to this cost discipline, the adjusted operating ratio (operating expenses as a % of revenues) is likely to have improved sequentially in the to-be-reported quarter.

What Does the Zacks Model Say?

The proven Zacks model does not predict an earnings beat for Covenant Logistics this time around. The combination of a positive  Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which is not the case here. You can see  the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP:  Covenant Logistics has an Earnings ESP of 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our  Earnings ESP Filter.

Zacks Rank: Covenant Logistics carries a Zacks Rank #2, currently.

Highlights of Q2 Earnings

Covenant Logistics’ second-quarter earnings per share (excluding 5 cents from non-recurring items) of 96 cents beat the Zacks Consensus Estimate of 64 cents. The bottom line surged in excess of 100% year over year.

Stocks to Consider

Investors interested in the broader Transportation  sector may consider C.H. Robinson Worldwide (CHRW - Free Report) , Knight-Swift Transportation Holdings (KNX - Free Report) and Landstar System (LSTR - Free Report) as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

C.H. Robinson Worldwide has an Earnings ESP of +1.06% and is Zacks #2 Ranked, presently. The company will release third-quarter 2021 results on Oct 26.

Knight-Swift has an Earnings ESP of +1.33% and a Zacks Rank #3 at present. The company is scheduled to report third-quarter 2021 earnings numbers on Oct 20.

Landstar System has an Earnings ESP of +1.91% and is currently a #2 Ranked player. The company will release third-quarter 2021 results on Oct 20.