The Q2 earnings season is gathering steam with releases pouring in. According to the latest Earnings Preview, by the end of this week, 280 S&P 500 companies will release their quarterly numbers. Out of them, 183 will be reporting during the course of this week.
Per the report, the entire S&P 500 fraternity is projected to end the Q2 reporting cycle with bottom-line growth of 8.6%. The same set of companies is projected to witness top-line growth to the tune of 4.7%.
Notably, 11 of the 16 Zacks sectors are expected to see their bottom line expand on a year-over-year basis. One such sector is the highly diversified Transportation sector. The participants from this space are likely to end this quarter with the top and the bottom line expanding 9.6% and 6.9%, respectively. Both these figures compare favorably with the readings in Q1, when revenues grew 6.9% and earnings contracted 17.8%.
In fact, transport stocks have benefited from an improving economy that has bolstered their revenue streams, resulting in the bullish projection for Q2. Additionally, a much-improved job market and rising disposable income have been a blessing for the sector participants. Apart from an improving economy, consumer confidence remains strong resulting in more Americans going on vacations bolstering airlines, which is a key component of the transportation sector.
Given this backdrop, investors interested in the transportation space will keenly await Q2 reports from key sector participants like Norfolk Southern Corporation (NSC - Free Report) , Alaska Air Group (ALK - Free Report) , Ryder System, Inc. (R - Free Report) and Allegiant Travel Company (ALGT - Free Report) on Jul 26.
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.
Based in Norfolk, VA, Norfolk Southern is a major player in the railroad space. We expect the company to report better-than-expected earnings in this quarter. This is because this Zacks Rank #2 (Buy) company has an Earnings ESP of +0.61% as the Most Accurate estimate is $1.65, while the Zacks Consensus Estimate is pegged at $1.64. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. (read more: Is a Beat in Store for Norfolk Southern in Q2 Earnings?)
Based in Seattle, WA, Alaska Air Group together with its partner regional carriers serves more than 100 cities across North America. We expect the company to report better-than-expected earnings per share in this quarter. This is because it has an Earnings ESP of +0.40% as the Most Accurate estimate is at $2.51, while the Zacks Consensus Estimate is pegged at $2.50. Moreover, the company currently carries a Zacks Rank #2 (read more: Alaska Air Group Q2 Earnings: A Beat in the Cards?).
Ryder System, a Florida-based company founded in 1933, is recognized as one of the world's largest providers of integrated logistics and transportation solutions. We expect the company to report better-than-expected earnings per share in this quarter. This is because it has an Earnings ESP of +3.23% as the Most Accurate estimate is at 96 cents, while the Zacks Consensus Estimate is pegged at 3 cents lower. (read more: Ryder System to Report Q2 Earnings: Is a Beat in Store?).
Also, the company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Based in Las Vegas, Allegiant Travel Company is the parent company of Allegiant Air. This low-cost Allegiant Air offers air travel both on a stand-alone basis and bundled with hotel rooms, rental cars and other travel-related services. We expect the company to report better-than-expected earnings per share in this quarter. This is because it has an Earnings ESP of +0.34% as the Most Accurate estimate is at $2.97, while the Zacks Consensus Estimate is pegged at a penny lower. Also, the company currently carries a Zacks Rank #2 (read more: Is Allegiant Travel Likely to Beat on Earnings in Q2?).
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