Shipping stocks fall under the widely diversified Transportation sector. As per our latest Earnings trends report, 66.7% of the S&P 500 companies under this sector (representing 64% in terms of market capitalization) reported their quarterly numbers as of Jul 22.
Although earnings growth rate for the sector is in the negative territory (15.7%), an impressive proportion of the sector participants (70%) have outshined the Zacks Consensus Estimate with respect to the bottom line in the Q2 earnings season so far. The impressive earnings beat is due to the bottom-line outperformance by leading players like CSX Corporation (CSX - Free Report) , Delta Air Lines (DAL - Free Report) and United Continental Holdings (UAL - Free Report) . Due to the plethora of headwinds confronting the space like the surge in terror attacks, uncertainty following the Brexit vote and the declining coal shipments, to name a few, the sector is expected to end Q2 with negative earnings growth of 12.6%. The transportation sector is one of the nine Zacks sectors (total 16) projected to see earnings deceleration in Q2. In fact, earnings growth is expected to be -3.4% for the for the entire S&P 500 index in Q2.
With majority of the members in the transportation sector having already reported their quarterly numbers, a high proportion of the “still-to-report” companies are shipping stocks. In fact, the shipping industry is going through tough times due to low freight rates, overcapacity and a dearth of bank financing, among other headwinds.
In the wake of these challenges, let’s take a peek into how these 5 shipping stocks are likely to fare in the second quarter. Results will be revealed on Jul 27.
Costamare Inc. (CMRE - Free Report) , based in Monaco, is one of the world's leading owners and providers of containerships for charter. According to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase its odds of an earnings surprise. Costamare has an Earnings ESP of +2.44% as the Most Accurate estimate is pegged at 42 cents while the Zacks Consensus Estimate is 1 cent lower. The company has a Zacks Rank #3. The favorable combination makes an earnings beat likely.
Diana Containerships Inc., based in Greece, is a global provider of shipping transportation services by virtue of its ownership of containerships.The company has a Zacks Rank #3. The shipping company has an Earnings ESP of 0.00% with the Most Accurate estimate matching the Zacks Consensus Estimate. The combination makes an earnings beat unlikely.
Gener8 Maritime, Inc. , based in New York, is a leading provider of international seaborne crude oil transportation services. Gener8 Maritime has an Earnings ESP of -5.66% as the Most Accurate estimate is pegged at 50 cents while the Zacks Consensus Estimate is 3 cents higher. The company has a Zacks Rank #4 (Sell). As it is, we caution against Sell-rated stocks going into the earnings announcement.
Kirby Corporation (KEX - Free Report) , based in Houston, TX, is a domestic tank barge operator, transporting bulk liquid offerings throughout the Mississippi River System, the Gulf Intracoastal Waterway, coastwise along all three U.S. coasts and in Alaska and Hawaii. Our model does not indicate that the company is likely to beat earnings this quarter. This is because Kirby Corporation is a Zacks Rank #4 (Sell) stock and has an Earnings ESP of 0.00% as the Most Accurate estimate is pegged at 70 cents, in line with the Zacks Consensus Estimate.
Monaco-based Scorpio Bulkers Inc. (SALT - Free Report) provides marine transportation of dry bulk commodities. Despite the Zacks Rank #2 (Buy) of the company, our model does not indicate that the company is likely to beat earnings this quarter. This is because the company has an Earnings ESP of 0.00% as the Most Accurate estimate is in line with the Zacks Consensus Estimate.