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Transport Stocks to Watch for Q3 Earnings on Oct 18: KSU, HA

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The Q3 earnings season is in the nascent stage with 34 S&P 500 participants having reported results so far. The season has started on a strong note courtesy of earnings beats from big names in the banking space like JPMorgan Chase & Co. (JPM - Free Report) . This week is going to an extremely busy one with several companies reporting their quarterly results. This week alone will see 244 companies, including 80 S&P 500 participants, revealing their Q3 numbers.

It will be a busy week for the transportation sector (one of the of the 16 Zacks sectors) too, as many big names in the space like American Airlines Group (AAL - Free Report) are scheduled to report quarterly numbers. According to our latest Earnings Trends Report, 20% of the sector participants (S&P 500) have unveiled their numbers so far, all of them outshining the Zacks Consensus Estimate for earnings. Transportation primes like Delta Air Lines (DAL - Free Report) and CSX Corporation (CSX - Free Report) kick started the Q3 earnings season with better-than-expected bottom-line figures.

However, the transportation sector has been undergoing challenging times of late due to a number of global headwinds like the surge in terror attacks, declining coal shipments and the Brexit referendum. Hence, it remains to be seen if the upward momentum will continue through the rest of the season.

Here we have compiled a list of two players operating in the widely diversified transportation space. Both these companies are scheduled to report quarterly numbers on Oct 18.

Kansas CitySouthern (KSU - Free Report) is slated to release Q3 results before the market opens. The company will kick off the earnings season in the railroad industry. Other players in the space like Union Pacific Corporation (UNP - Free Report) , which has a Zacks Rank # 2 (Buy), are slated to report their quarterly numbers later in the week. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the second quarter, the Missouri-based railroad operator reported better-than-expected earnings. The bottom line also improved significantly on a year-over-year basis due to low costs. Driven by its efficient cost management, we expect the railroad operator to report impressive earnings in the third quarter as well.

According to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) – to increase its odds of an earnings surprise. The railroad operator carries a Zacks Rank # 3 and has a positive Earnings ESP of 0.83%. The favorable combination makes us reasonably confident of an earnings beat (Read more: Will Kansas City Southern Beat on Earnings in Q3?).

KANSAS CITY SOU Price and EPS Surprise



Hawaiian Holdings (HA - Free Report) , the parent company of Hawaiian Airlines, is scheduled to report third-quarter 2016 results after the closing bell. The carrier is likely to beat the Zacks Consensus Estimate for earnings, as per our quantitative model. This is because the company has an Earnings ESP of +1.65% and a Zacks Rank #3. The carrier expects operating revenue per ASM to grow in the band of 0.5–1.5%, on a year-over-year basis for Q3. Economic fuel cost per gallon is estimated in the band of $1.48 to $1.53, as against the year-ago figure of $1.95 (Read more: Will Hawaiian Holdings Beat Q3 Earnings Estimates?).

HAWAIIAN HLDGS Price and EPS Surprise



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