The Q3 earnings season is in its final phase and recent trends indicate that the quarter has been an extremely successful one, particularly in terms of bottom-line growth. With results from 89% S&P 500 companies available, our latest Earnings Preview report shows 4% year-over-year growth in earnings. Revenues have expanded 2.7% on an annualized basis.
The favorable scenario is unlikely to change drastically as only a handful of reports are still to be revealed. The above report predicts that the S&P 500 index will end Q3 with earnings and revenues increasing 3.3% and 1.5%, respectively. The figures represent a vast improvement from that witnessed in the previous five quarters, when earnings deteriorated for the index.
Moreover, the current projection of 3.3% bottom-line growth highlights the steady upward movement of earnings estimates. As recently as in October (the start of the Q3 earnings season) the S&P 500 Index was projected to end the reporting cycle with earnings deterioration of 3%.
Unfortunately, the condition of the companies in the transportation sector (one of the 16 Zacks sectors) is quite different. With the entire S&P 500 transportation fraternity having already reported, the picture to have emerged is even bleaker than that in Q2. The sector saw bottom-line contraction of 13.6% compared with a decline of 12.4% in Q2.
The outcome is hardly surprising as the sector has been facing multiple headwinds like declining travel demand due to security fears, weak coal market, driver shortages and Brexit-induced uncertainty. The dismal performances of key sector participants like Expeditors International of Washington Inc. (EXPD - Free Report) and Canadian Pacific (CP - Free Report) have added to the woes of the beleaguered sector.
Though most transportation companies (including the entire S&P 500 fraternity) have already reported their quarterly numbers, there are a few sector participants that yet to reveal their respective Q3 financials. Transport firms like Scorpio Tankers Inc. (STNG - Free Report) , Gener8 Maritime Inc. (GNRT - Free Report) and Dynagas LNG Partners LP (DLNG - Free Report) are set to report their respective Q3 earnings results on Nov 14. Investors will keenly await the reports to find out if they can emerge as bright spots in the otherwise hard-pressed sector.
Scorpio Tankers is a provider of marine transportation of petroleum products worldwide. 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 the odds of an earnings surprise. However, the picture is gloomy for this shipping stock ahead of its third-quarter release. The company has an Earnings ESP of -20.00% and a Zacks Rank #4 (Sell). As it is, we caution against Sell-rated stocks going into the earnings announcement.
Gener8 Maritime, based in New York, is a leading provider of international seaborne crude oil transportation services. Gener8 Maritime has a Zacks Rank #5 (Strong Sell). It has an Earnings ESP of 0.00% as the Most Accurate estimate is in line with the Zacks Consensus Estimate of 8 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Dynagas LNG Partners LP, based in Greece, focuses on owning and operating LNG carriers that are employed on multi-year contracts with international energy companies. The company has Earnings ESP of 0.00% (the Most Accurate Estimate of 44 cents is in line with the Zacks Consensus Estimate), which complicates surprise predication in spite of its Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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