The transportation sector is facing turbulent times, courtesy multiple headwinds like the rise in terror attacks, decline in coal shipments and the Brexit vote. The gloomy scenario is well reflected by our earnings preview report which has predicted a 13.1% year-over-year earnings decline for the sector in the second quarter. The top line is expected to shrink 1.4% in the quarter.
In fact, transportation is not the only sector expected to post dismal numbers in the second quarter as 9 of the 16 Zacks sectors are expected to show earnings deceleration. According to the above report, total earnings for the S&P 500 companies are expected to decline 6.2% and the top line is projected to contract 0.6% due to global concerns. In the event of the forecast coming true, this would be the fifth consecutive quarter of earnings deterioration for the S&P 500 players.
Coming back to transportation sector, despite oil being relatively cheap (around $45 a barrel which is way below the levels of mid-2014), the gloomy projection for the sector suggests that the prevalent headwinds will hurt the results big time. The sector is highly diversified including airlines, truckers, shippers and railroads. Despite the tough environment, FedEx Corporation (FDX - Free Report) had performed reasonably well in its latest earnings release, outshining the Zacks Consensus Estimate with respect to revenues as well as earnings.
The ongoing week will see two other transportation players -- railroad operator CSX Corporation (CSX - Free Report) and airline behemoth Delta Air Lines (DAL - Free Report) -- unveiling their respective second quarter numbers. Let’s take a look at the possibilities of a beat or miss these players have.
Delta Air Lines is scheduled to report second-quarter 2016 results on Jul 14, before the market opens. With this, Delta will kick off the earnings season in the airline sector, which will see a flood of earnings reports next week with the likes of Southwest Airlines (LUV - Free Report) and American Airlines Group (AAL - Free Report) reporting.
Delta, based in Atlanta, GA, had reported better-than-expected earnings in the first quarter of 2016 on the back of low fuel costs. In fact, the carrier reported better-than-expected earnings in three of the last four quarters, the average beat being 1.84% (read more: Why Q2 Earnings Could Be Dampening for Delta Stock).
CSX Corporation is scheduled to report second-quarter 2016 results on Jul 13, after markets close. The company has an Earnings ESP of 2.27% and a Zacks Rank #3 (Hold). Our model had not predicted an earnings beat initially but the current combination of positive ESP and Zacks Rank #3 hint at a beat in the to-be-reported quarter.
The company, based in Jacksonville, FL, outshined the Zacks Consensus Estimate in three of the last four quarters at an average of 3.50%. (read more: Can CSX Corp Pull a Surprise this Earnings Season?).
Stay tuned! Check later on our full write-up on earnings releases of these stocks.
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