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Scorpio Tankers (STNG) to Post Q2 Earnings: What's in Store?

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Scorpio Tankers (STNG - Free Report) is scheduled to release second-quarter 2022 results on Jul 28, before market open.

The shipping company has a mixed surprise record as its earnings lagged the Zacks Consensus Estimate in two of the last four quarters (outpacing the same in the other two). The average beat is 12.3%.

The Zacks Consensus Estimate for second-quarter earnings has been revised 85.8% upward to $2.88 over the past 60 days.

Against this backdrop, let’s examine the factors that are likely to have impacted STNG’s June-quarter performance.

We expect Scorpio Tankers’ second-quarter bottom-line performance to have been hurt by higher vessel operating expenses, mainly due to the increase in the average number of vessels in its fleet. High fuel costs (oil price was up 5.5% year over year in the April-June period) are likely to have shot up total expenses.

However, with the gradual resumption of economic activities, the world trade gained pace and this should aid the second-quarter results of shipping stocks like Scorpio Tankers. This is because the shipping industry is responsible for transporting a high proportion of goods involved in world trade.

Optimism surrounding the oil-tanker market owing to increased demand for oil is a huge positive for STNG and is likely to have boosted its top line in the to-be-reported quarter.

Earnings Whispers

Our proven model does not predict an earnings beat for Scorpio Tankers this time around. The combination of a positive  Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. However, that is not the case here, as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Scorpio Tankers has an Earnings ESP of -1.80% as the Most Accurate Estimate is currently pegged at $2.83, 5 cents below 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: Scorpio Tankers sports a Zacks Rank of 1, currently.

Highlights of Q1

Scorpio Tankers’ first-quarter 2022 loss (excluding $1.25 from non-recurring items) of 27 cents per share was narrower than the Zacks Consensus Estimate of a loss of 52 cents. Total revenues of $172 million increased 28.2% year over year and marginally surpassed the Zacks Consensus Estimate.

Stocks to Consider

Here are a few stocks worth considering from the broader Zacks Transportation sector, as our model shows that these have the right combination of elements to beat on second-quarter 2022 earnings:

Kirby (KEX - Free Report)  has an Earnings ESP of +0.70% and a Zacks Rank #3. KEX is set to release second-quarter results on Jul 28.  

Favorable market conditions, such as high refinery and petrochemical plant utilization, increased volumes from new petrochemical plants and minimal new barge construction are likely to have improved barge utilization. Both the distribution and services segments are likely to havebenefited from an improved performance in the oil and gas as well as the commercial and industrial markets.

Southwest Airlines (LUV - Free Report) has an Earnings ESP of +5.01% and a Zacks Rank of 3. LUV will release second-quarter earnings numbers on Jul 28.  

Owing to betterment in air-travel demand, LUV anticipates second-quarter load factor (% of seats filled with passengers) in the range of 85-87%. Operating revenues are estimated to increase 12-15% in the second quarter from the 2019 level.

Schneider National (SNDR - Free Report) has an Earnings ESP of +3.35% and is Zacks #3 Ranked. SNDR will announce second-quarter financial numbers on Jul 28.  Solid performances in the Truckload, Intermodal and Logistics segments are likely to have driven SNDR’s second-quarter 2022 results.

Escalating operating expenses might have hurt its bottom-line results.

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