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Can These 4 Transportation Stocks Hit Q3 Earnings Targets?
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The widely diversified Zacks Transportation sector is facing multiple headwinds, ranging from inflation-induced elevated interest rates, weak freight demand and lingering supply-chain woes. Geopolitical uncertainties and higher inflation continue to hurt consumer sentiment and growth expectations. The freight market downturn, driven by excess freight capacity than freight volumes, has also hit the sector hard.
However, the decline in fuel expenses represents a tailwind for the transportation sector. Notably, oil prices have declined 14% in the July-September period. As fuel expenses represent a key input cost for any transportation player, the decline in oil prices bodes well for the bottom-line growth of stocks.
Improvement in the demand scenario from the pandemic lows is another major positive. The uptick in trading volumes is likely to have aided the performance of transportation companies in the soon-to-be-reported quarter.
Against this backdrop, investors interested in the Zacks Transportation sector are keenly waiting for the results of Southwest Airlines (LUV - Free Report) , American Airlines (AAL - Free Report) , Union Pacific (UNP - Free Report) and Norfolk Southern (NSC - Free Report) , which are slated to be released this week.
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.
Let’s delve deeper.
Southwest Airlines’ top-line results are likely to benefit from air travel demand strength in the September quarter. The Zacks Consensus Estimate for LUV’s third-quarter 2024 revenues is pegged at $6.80 billion, indicating 4.2% year-over-year growth.
Further, LUV’s encouraging third-quarter 2024 guidance is added positive. LUV now anticipates its third-quarter revenue per available seat mile (RASM or unit revenues) to increase in the range of 2%-3% on a year-over-year basis. This marks an improvement from the previous forecast of flat to down 2%. The upside is owing to the improving industry demand trends and the company's revenue management techniques.
Even though fuel expenses are low, LUV’s bottom line continues to grapple with rising labor and airport costs and higher interest expenses.Notably, the Zacks Consensus Estimate for LUV’s third-quarter 2024 earnings has been revised downward by 80% in the past 90 days to 5 cents per share. Moreover, the consensus mark implies an 86.8% decline from the year-ago actuals.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
American Airlines’ top-line performance in the third quarter is expected to have benefited from upbeat air-travel demand, particularly on the domestic front. Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn strengthening total revenues.
The Zacks Consensus Estimate for third-quarter 2024 revenues is currently pegged at $13.5 billion, which indicates a 0.06% uptick from the year-ago actual. The Zacks Consensus Estimate for third-quarter 2024 earnings has been revised upward in excess of 200% in the past 30 days and is currently pegged at 13 cents per share. However, the consensus mark implies a 65.8% decline from the year-ago actual. AAL is burdened with expenses related to non-fuel unit costs due to high labor costs.
AAL is scheduled to report third-quarter 2024 results on Oct. 24, before market open. Our proven model predicts an earnings beat for AAL this season as it has an Earnings ESP of +32.87% and a Zacks Rank #2 at present.
American Airlines Group Inc. Price and EPS Surprise
Union Pacific is scheduled to report third-quarter 2024 results on Oct. 24, before market open.
The Zacks Consensus Estimate for UNP’s third-quarter revenues is pegged at $6.19 billion, which indicates growth of 4.2% from the year-ago levels. The top line is likely to have gained from core pricing gains and business mix.
The Zacks Consensus Estimate for third-quarter 2024 earnings has been revised downward by 2% in the past 90 days and is currently pegged at $2.76 per share. However, the consensus mark for earnings implies a 10% surge from the year-ago actual. Although strong operational efficiency and favorable pricing comfort the company’s bottom line, UNP suffers from the normalization of e-commerce sales and softened consumer markets. Reduced fuel surcharge revenues, geopolitical uncertainty and high inflation are other concerns too.
Our proven model does not conclusively predict an earnings beat for UNP this earnings season. The company has an Earnings ESP of -0.20% and a Zacks Rank #3 at present.
Norfolk Southern’s top line is likely to have benefited from solid performances in its Merchandise segment, partially offset by weakness across its Coal segment. The Zacks Consensus Estimate for NSC’s third-quarter 2024 revenues is pegged at $3.09 billion, indicating 4% growth year over year.
On the flip side, weakness pertaining to freight revenues and volumes does not bode well for NSC. The company's high debt load and share price volatility are also causes for worry. The Zacks Consensus Estimate for NSC’s third-quarter 2024 earnings has remained constant at $3.10 per share in the past 60 days.
NSC is scheduled to report third-quarter 2024 results on Oct. 22, before market open. Our proven model predicts an earnings beat for NSC this earnings season. NSC has an Earnings ESP of +0.02% and a Zacks Rank #3 at present.
Image: Bigstock
Can These 4 Transportation Stocks Hit Q3 Earnings Targets?
The widely diversified Zacks Transportation sector is facing multiple headwinds, ranging from inflation-induced elevated interest rates, weak freight demand and lingering supply-chain woes. Geopolitical uncertainties and higher inflation continue to hurt consumer sentiment and growth expectations. The freight market downturn, driven by excess freight capacity than freight volumes, has also hit the sector hard.
However, the decline in fuel expenses represents a tailwind for the transportation sector. Notably, oil prices have declined 14% in the July-September period. As fuel expenses represent a key input cost for any transportation player, the decline in oil prices bodes well for the bottom-line growth of stocks.
Improvement in the demand scenario from the pandemic lows is another major positive. The uptick in trading volumes is likely to have aided the performance of transportation companies in the soon-to-be-reported quarter.
Against this backdrop, investors interested in the Zacks Transportation sector are keenly waiting for the results of Southwest Airlines (LUV - Free Report) , American Airlines (AAL - Free Report) , Union Pacific (UNP - Free Report) and Norfolk Southern (NSC - Free Report) , which are slated to be released this week.
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.
Let’s delve deeper.
Southwest Airlines’ top-line results are likely to benefit from air travel demand strength in the September quarter. The Zacks Consensus Estimate for LUV’s third-quarter 2024 revenues is pegged at $6.80 billion, indicating 4.2% year-over-year growth.
Further, LUV’s encouraging third-quarter 2024 guidance is added positive. LUV now anticipates its third-quarter revenue per available seat mile (RASM or unit revenues) to increase in the range of 2%-3% on a year-over-year basis. This marks an improvement from the previous forecast of flat to down 2%. The upside is owing to the improving industry demand trends and the company's revenue management techniques.
Even though fuel expenses are low, LUV’s bottom line continues to grapple with rising labor and airport costs and higher interest expenses.Notably, the Zacks Consensus Estimate for LUV’s third-quarter 2024 earnings has been revised downward by 80% in the past 90 days to 5 cents per share. Moreover, the consensus mark implies an 86.8% decline from the year-ago actuals.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
LUV is scheduled to report third-quarter 2024 results on Oct. 24. Our proven model does not conclusively predict an earnings beat for Southwest Airlines this season as it has an Earnings ESP of 0.00% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Southwest Airlines Co. Price and EPS Surprise
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
American Airlines’ top-line performance in the third quarter is expected to have benefited from upbeat air-travel demand, particularly on the domestic front. Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn strengthening total revenues.
The Zacks Consensus Estimate for third-quarter 2024 revenues is currently pegged at $13.5 billion, which indicates a 0.06% uptick from the year-ago actual. The Zacks Consensus Estimate for third-quarter 2024 earnings has been revised upward in excess of 200% in the past 30 days and is currently pegged at 13 cents per share. However, the consensus mark implies a 65.8% decline from the year-ago actual. AAL is burdened with expenses related to non-fuel unit costs due to high labor costs.
AAL is scheduled to report third-quarter 2024 results on Oct. 24, before market open. Our proven model predicts an earnings beat for AAL this season as it has an Earnings ESP of +32.87% and a Zacks Rank #2 at present.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
Union Pacific is scheduled to report third-quarter 2024 results on Oct. 24, before market open.
The Zacks Consensus Estimate for UNP’s third-quarter revenues is pegged at $6.19 billion, which indicates growth of 4.2% from the year-ago levels. The top line is likely to have gained from core pricing gains and business mix.
The Zacks Consensus Estimate for third-quarter 2024 earnings has been revised downward by 2% in the past 90 days and is currently pegged at $2.76 per share. However, the consensus mark for earnings implies a 10% surge from the year-ago actual. Although strong operational efficiency and favorable pricing comfort the company’s bottom line, UNP suffers from the normalization of e-commerce sales and softened consumer markets. Reduced fuel surcharge revenues, geopolitical uncertainty and high inflation are other concerns too.
Our proven model does not conclusively predict an earnings beat for UNP this earnings season. The company has an Earnings ESP of -0.20% and a Zacks Rank #3 at present.
Union Pacific Corporation Price and EPS Surprise
Union Pacific Corporation price-eps-surprise | Union Pacific Corporation Quote
Norfolk Southern’s top line is likely to have benefited from solid performances in its Merchandise segment, partially offset by weakness across its Coal segment. The Zacks Consensus Estimate for NSC’s third-quarter 2024 revenues is pegged at $3.09 billion, indicating 4% growth year over year.
On the flip side, weakness pertaining to freight revenues and volumes does not bode well for NSC. The company's high debt load and share price volatility are also causes for worry. The Zacks Consensus Estimate for NSC’s third-quarter 2024 earnings has remained constant at $3.10 per share in the past 60 days.
NSC is scheduled to report third-quarter 2024 results on Oct. 22, before market open. Our proven model predicts an earnings beat for NSC this earnings season. NSC has an Earnings ESP of +0.02% and a Zacks Rank #3 at present.
Norfolk Southern Corporation Price and Consensus
Norfolk Southern Corporation price-consensus-chart | Norfolk Southern Corporation Quote