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Transportation Stocks' Q3 Earnings Due on Oct 19: UNP, ALK & AAL
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The Zacks Transportation sector is widely diversified. It houses airlines, railroads, shipping and trucking companies, to name a few.
Only a handful of transportation companies have reported their third-quarter 2023 numbers so far.
The gradual uptick in the economic scenario implies that trading volumes have consistently risen. This bodes well for the sector.
With normalcy being restored post-COVID-19 and people returning to work, airlines in the sector are likely to have benefited from increased passenger revenues in the quarter.
However, the northward movement in oil price is not a welcome development for stocks in the sector.
Oil price surged 28.5% in the July-September period due to the extension of production cut by Saudi Arabia and Russia through the end of the current year. As fuel expenses represent a key input cost for any transportation player, the uptick in these costs is likely to have hurt the bottom line of the transportation companies in the third quarter.
Given this backdrop, investors interested in the Zacks Transportation sector keenly await the results of Union Pacific (UNP - Free Report) , Alaska Air Group (ALK - Free Report) and American Airlines (AAL - Free Report) , scheduled to be released on Oct 19.
Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
We expect Union Pacific’s performance to have been affected by soft revenues due to weak freight demand. Our estimate for third-quarter 2023 freight revenues indicates a 5% decline from the third-quarter 2022 actuals.
Our proven model does not predict an earnings beat for UNP this season, as the company has an Earnings ESP of -1.41% and a Zacks Rank #3 at present. Notably, our model had not predicted an surprise for UNP earlier as well, when its third-quarter earnings preview article was issued. At that time, UNP had an Earnings ESP of -5.32% and a Zacks Rank #3.
We expect Alaska Air’s performance to have been buoyed by increased passenger revenues driven by improved air travel demand. Our estimate for third-quarter 2023 passenger revenues indicates a 0.6% increase from the third-quarter 2022 actuals. However, high fuel costs are likely to have hurt the bottom line.
Riding on high passenger revenues, our proven model hints at an earnings beat for ALK this season. The company has an Earnings ESP of +0.10% and a Zacks Rank #3 at present. Notably, our model had predicted a positive earnings surprise for ALK earlier as well, when its third-quarter earnings preview article was issued. At that time, ALK had an Earnings ESP of +0.66% and a Zacks Rank #3.
We expect American Airlines’ performance to have been buoyed by increased passenger revenues due to improved air travel demand. Our estimate for third-quarter 2023 passenger revenues indicates a 0.6% increase from the third-quarter 2022 actuals. However, high labor and fuel costs are likely to have hurt the bottom line. The Zacks Consensus Estimate for third-quarter earnings has been revised 70.4% downward over the past 60 days, mainly due to high costs. The lowered bar increases the possibility of an earnings beat despite high expenses.
The company has an Earnings ESP of +2.83% and a Zacks Rank #3 at present. Our previous article showed that AAL did not have the favorable combination to beat on earnings in the soon-to-be-reported quarter. At that time, AAL had an Earnings ESP of 0.00% and a Zacks Rank #3. However, estimates changed thereafter, and we are more certain of a beat now.
American Airlines Group Inc. Price and EPS Surprise
Image: Bigstock
Transportation Stocks' Q3 Earnings Due on Oct 19: UNP, ALK & AAL
The Zacks Transportation sector is widely diversified. It houses airlines, railroads, shipping and trucking companies, to name a few.
Only a handful of transportation companies have reported their third-quarter 2023 numbers so far.
The gradual uptick in the economic scenario implies that trading volumes have consistently risen. This bodes well for the sector.
With normalcy being restored post-COVID-19 and people returning to work, airlines in the sector are likely to have benefited from increased passenger revenues in the quarter.
However, the northward movement in oil price is not a welcome development for stocks in the sector.
Oil price surged 28.5% in the July-September period due to the extension of production cut by Saudi Arabia and Russia through the end of the current year. As fuel expenses represent a key input cost for any transportation player, the uptick in these costs is likely to have hurt the bottom line of the transportation companies in the third quarter.
Given this backdrop, investors interested in the Zacks Transportation sector keenly await the results of Union Pacific (UNP - Free Report) , Alaska Air Group (ALK - Free Report) and American Airlines (AAL - Free Report) , scheduled to be released on Oct 19.
Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. 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 stocks here.
Let's delve deeper.
We expect Union Pacific’s performance to have been affected by soft revenues due to weak freight demand. Our estimate for third-quarter 2023 freight revenues indicates a 5% decline from the third-quarter 2022 actuals.
Our proven model does not predict an earnings beat for UNP this season, as the company has an Earnings ESP of -1.41% and a Zacks Rank #3 at present. Notably, our model had not predicted an surprise for UNP earlier as well, when its third-quarter earnings preview article was issued. At that time, UNP had an Earnings ESP of -5.32% and a Zacks Rank #3.
Union Pacific Corporation Price and EPS Surprise
Union Pacific Corporation price-eps-surprise | Union Pacific Corporation Quote
We expect Alaska Air’s performance to have been buoyed by increased passenger revenues driven by improved air travel demand. Our estimate for third-quarter 2023 passenger revenues indicates a 0.6% increase from the third-quarter 2022 actuals. However, high fuel costs are likely to have hurt the bottom line.
Riding on high passenger revenues, our proven model hints at an earnings beat for ALK this season. The company has an Earnings ESP of +0.10% and a Zacks Rank #3 at present. Notably, our model had predicted a positive earnings surprise for ALK earlier as well, when its third-quarter earnings preview article was issued. At that time, ALK had an Earnings ESP of +0.66% and a Zacks Rank #3.
Alaska Air Group, Inc. Price and EPS Surprise
Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. Quote
We expect American Airlines’ performance to have been buoyed by increased passenger revenues due to improved air travel demand. Our estimate for third-quarter 2023 passenger revenues indicates a 0.6% increase from the third-quarter 2022 actuals. However, high labor and fuel costs are likely to have hurt the bottom line. The Zacks Consensus Estimate for third-quarter earnings has been revised 70.4% downward over the past 60 days, mainly due to high costs. The lowered bar increases the possibility of an earnings beat despite high expenses.
The company has an Earnings ESP of +2.83% and a Zacks Rank #3 at present. Our previous article showed that AAL did not have the favorable combination to beat on earnings in the soon-to-be-reported quarter. At that time, AAL had an Earnings ESP of 0.00% and a Zacks Rank #3. However, estimates changed thereafter, and we are more certain of a beat now.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
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