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Transportation Stocks' Oct 20 Q3 Earnings Roster: ALK, AAL, UNP
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The Zacks Transportation sector is widely diversified in nature. It houses airlines, railroads, shipping and trucking companies to name a few.
Only one S&P 500 transportation company, namely Delta Air Lines, Inc. (DAL - Free Report) has reported third-quarter 2022 numbers so far. Delta’s revenues of $13,975 million lagged the Zacks Consensus Estimate of $14,157.2 million but increased more than 52% year over year on the back of high air-travel demand. The buoyant air-travel demand scenario is also evident from the total operating revenue increase of 11% from third-quarter 2019 (pre-coronavirus) levels.
Despite headwinds like inflation-induced market volatility, supply-chain woes and high-fuel costs, which have dented the prospects of the Transportation sector, the sector players have been aided by some positives. Owing to the uptick in economic activities, freight demand has been strong despite minor hiccups. This supported growth of transportation players like railroad operators. Following the relaxation of COVID-related restrictions, people resumed their daily activities and air-travel demand rebounded very strongly. This was a major tailwind for the airline companies in the sector. Even though economies have reopened, consumers’ urge for online shopping remains. This continued strength in e-commerce demand also bodes well.
The positivity surrounding the sector is evident from the latest Earnings Preview report, which indicates that stocks in the Transportation sector are expected to report year-over-year growth of 48.4% earnings and 20.6% revenues in third-quarter 2022.
Given this encouraging backdrop, let’s discuss three Transportation sector stocks —Alaska Air Group (ALK - Free Report) , American Airlines (AAL - Free Report) and Union Pacific Corporation (UNP - Free Report) , which are scheduled to release their third-quarter 2022 earnings reports on Oct 20.
Our quantitative model suggests that the combination of the following two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Alaska Air’s results are likely to reflect a continued recovery in air-travel demand and an improvement in passenger revenues. Moreover, its top-line guidance is encouraging. ALK expects total revenues to increase 16-19% from the third quarter of 2019 actuals. The passenger load factor is expected to be in the range of 85-88%.
However, high fuel costs are likely to remain an overhang on Alaska Air’s bottom line. The carrier expects its third-quarter economic fuel cost to be in the $3.79-$3.89 range. The Zacks Consensus Estimate for economic fuel cost per gallon is pegged at $3.81, indicating 85.8% growth year over year.
Our proven model does not conclusively predict an earnings beat for Alaska Air this season as ALK has an Earnings ESP of -0.73% and a Zacks Rank #3 at present.
American Airlines revenues are likely to have been aided by buoyant air-travel demand and an improvement in passenger revenues. Moreover, AAL’s bullish top-line guidance is also encouraging. Total revenues in the third quarter of 2022 are anticipated to be roughly 10-12%, higher than the level recorded in third-quarter 2019. Management expects TRASM to be 20-24% higher than third-quarter 2019 actuals.
On the flip side, an increase in oil prices continues to remain an overhang on AAL’s bottom line. The fuel cost per gallon in third-quarter 2022 is expected in the $3.73-$3.78 band.
Our proven model does not conclusively predict a beat for American Airlines this earnings season as AAL has an Earnings ESP of -1.79% and a Zacks Rank #3 at present. At the time, the third-quarter earnings preview article was issued, AAL had an Earnings ESP of -12.16% and a Zacks Rank #3.
American Airlines Group Inc. Price and EPS Surprise
Strong freight demand is expected to have boosted Union Pacific’s freight revenues in the third quarter. On the flip side, escalating operating expenses, primarily due to rising fuel prices, remain an overhang on Union Pacific’s bottom line. The Zacks Consensus Estimate for average fuel price per gallon consumed is pegged at $4.09, indicating growth of 72.5% from the year-ago reported figure.
Despite high fuel price concerns, our proven model predicts an earnings beat for Union Pacific this earnings season as UNP has an Earnings ESP of +0.67% and a Zacks Rank #3 at present.
Earlier, the third-quarter earnings preview article showed that Union Pacific was unlikely to beat on earnings this quarter. At that time, UNP had an Earnings ESP of -0.86% and a Zacks Rank #3. However, estimates changed thereafter and we are more certain of a beat now.
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Transportation Stocks' Oct 20 Q3 Earnings Roster: ALK, AAL, UNP
The Zacks Transportation sector is widely diversified in nature. It houses airlines, railroads, shipping and trucking companies to name a few.
Only one S&P 500 transportation company, namely Delta Air Lines, Inc. (DAL - Free Report) has reported third-quarter 2022 numbers so far. Delta’s revenues of $13,975 million lagged the Zacks Consensus Estimate of $14,157.2 million but increased more than 52% year over year on the back of high air-travel demand. The buoyant air-travel demand scenario is also evident from the total operating revenue increase of 11% from third-quarter 2019 (pre-coronavirus) levels.
Despite headwinds like inflation-induced market volatility, supply-chain woes and high-fuel costs, which have dented the prospects of the Transportation sector, the sector players have been aided by some positives. Owing to the uptick in economic activities, freight demand has been strong despite minor hiccups. This supported growth of transportation players like railroad operators. Following the relaxation of COVID-related restrictions, people resumed their daily activities and air-travel demand rebounded very strongly. This was a major tailwind for the airline companies in the sector. Even though economies have reopened, consumers’ urge for online shopping remains. This continued strength in e-commerce demand also bodes well.
The positivity surrounding the sector is evident from the latest Earnings Preview report, which indicates that stocks in the Transportation sector are expected to report year-over-year growth of 48.4% earnings and 20.6% revenues in third-quarter 2022.
Given this encouraging backdrop, let’s discuss three Transportation sector stocks —Alaska Air Group (ALK - Free Report) , American Airlines (AAL - Free Report) and Union Pacific Corporation (UNP - Free Report) , which are scheduled to release their third-quarter 2022 earnings reports on Oct 20.
Our quantitative model suggests that the combination of the following two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Let’s delve deeper.
Alaska Air’s results are likely to reflect a continued recovery in air-travel demand and an improvement in passenger revenues. Moreover, its top-line guidance is encouraging. ALK expects total revenues to increase 16-19% from the third quarter of 2019 actuals. The passenger load factor is expected to be in the range of 85-88%.
However, high fuel costs are likely to remain an overhang on Alaska Air’s bottom line. The carrier expects its third-quarter economic fuel cost to be in the $3.79-$3.89 range. The Zacks Consensus Estimate for economic fuel cost per gallon is pegged at $3.81, indicating 85.8% growth year over year.
Our proven model does not conclusively predict an earnings beat for Alaska Air this season as ALK has an Earnings ESP of -0.73% and a Zacks Rank #3 at present.
Alaska Air Group, Inc. Price and EPS Surprise
Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. Quote
American Airlines revenues are likely to have been aided by buoyant air-travel demand and an improvement in passenger revenues. Moreover, AAL’s bullish top-line guidance is also encouraging. Total revenues in the third quarter of 2022 are anticipated to be roughly 10-12%, higher than the level recorded in third-quarter 2019. Management expects TRASM to be 20-24% higher than third-quarter 2019 actuals.
On the flip side, an increase in oil prices continues to remain an overhang on AAL’s bottom line. The fuel cost per gallon in third-quarter 2022 is expected in the $3.73-$3.78 band.
Our proven model does not conclusively predict a beat for American Airlines this earnings season as AAL has an Earnings ESP of -1.79% and a Zacks Rank #3 at present. At the time, the third-quarter earnings preview article was issued, AAL had an Earnings ESP of -12.16% and a Zacks Rank #3.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
Strong freight demand is expected to have boosted Union Pacific’s freight revenues in the third quarter. On the flip side, escalating operating expenses, primarily due to rising fuel prices, remain an overhang on Union Pacific’s bottom line. The Zacks Consensus Estimate for average fuel price per gallon consumed is pegged at $4.09, indicating growth of 72.5% from the year-ago reported figure.
Despite high fuel price concerns, our proven model predicts an earnings beat for Union Pacific this earnings season as UNP has an Earnings ESP of +0.67% and a Zacks Rank #3 at present.
Earlier, the third-quarter earnings preview article showed that Union Pacific was unlikely to beat on earnings this quarter. At that time, UNP had an Earnings ESP of -0.86% and a Zacks Rank #3. However, estimates changed thereafter and we are more certain of a beat now.
Union Pacific Corporation Price and EPS Surprise
Union Pacific Corporation price-eps-surprise | Union Pacific Corporation Quote
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