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Will Q1 Earnings Deliver for These 4 Transportation Stocks?
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The Q1 earnings season is unwinding fast with 154 S&P 500 companies (representing 37.9% of the total market capitalization of the coveted index) having reported results as of Apr 25. In fact, the picture that has evolved thus far is an extremely rosy one.
Per the latest Earnings Preview, total earnings for these companies have increased 25.4% year over year. Also, revenues for the same improved 10.3% on a year-over-year basis. Furthermore, 80.5% of these companies have outpaced earnings estimates and 72.1% surpassed top-line expectations.
What is even more encouraging is that this bull run is likely to continue for the rest of the Q1 reporting cycle. According to the above report, this earnings season seems to be well on track to register the highest level of year-over-year earnings growth in the last seven years. It also predicted that overall earnings for all the S&P 500 are expected to be up 20% on 8% growth in revenues. This bullish projection can be attributed to a corporate tax overhaul and relatively healthy job data.
Given the prevalent healthy scenario, it is quite natural that most sectors should deliver an impressive performance. In fact, per the above report, 15 of the 16 Zacks sectors are projected to end Q1 with earnings growth year over year. Moreover, most of those 15 sectors are projected to end Q1 with double-digit earnings growth.
One of these high-flying sectors is Transportation. Majority of the sector participants (57.1%) have already reported financial numbers. The performances of the S&P 500 transportation companies so far, indicate a 23.7% increase in total earnings year over year, with 75% outperforming on the bottom-line front. The members of this highly diversified sector are projected to end Q1 with earnings growth of 19.9%, much higher than the 3.5% in the final quarter of 2017.
Factors Responsible for Transports Flying High
It is a well-documented fact that stocks in the Transportation space had a rough time last year due to factors like hurricanes and public-relation related fiascos. Even though, headwinds like foul weather and high costs have hurt transports in Q1, sector participants managed to overcome the obstacles and perform well this earnings season.
Notably, factors like the new tax law, improved unit revenue scenario, thriving domestic economy and strong performance of the intermodal division have helped this key sector to perform well in Q1 reporting cycle.
Transports’ Bull Run Likely to Continue
With the Transportation sector very much in favor, it is likely that quite a few companies in this space that have not yet disclosed their quarterly numbers will report better-than-expected results in Q1. Given this backdrop, it seems to be a prudent idea to add such stocks to one’s portfolio now.
How to Make the Right Choice?
With multiple companies present in the Transportation space, the task of selecting the right stocks is by no means an easy one. The process is akin to searching for a needle in a haystack unless one is aware of an appropriate method to make the right choice.
One way to narrow down the list of choices is by looking at stocks with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they report with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology to determine which stocks have the best chance to surprise in their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination have the chance of a positive earnings surprise is as high as 70%.
An earnings beat boosts investor confidence in the stock, which is reflected in its rapid price appreciation.
4 Attractive Picks
With the aid of the above methodology, we have zeroed in on four transportation stocks that are likely to report better-than-expected earnings per share in Q1.
Copa Holdings, S.A. (CPA - Free Report) is a Panama City-based carrier. It has an Earnings ESP of +0.78%, as the Most Accurate estimate of $2.80 per share is above the Zacks Consensus Estimate by 2 cents. The company carries a Zacks Rank #3, which when combined with a positive ESP, makes us confident of an earnings beat. Copa Holdings will unveil its results on May 9. You can see the complete list of today’s Zacks #1 Rank stocks here.
Additionally, the carrier has an impressive earnings history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 5.5%.
LATAM Airlines Group S.A. , based in Santiago, Chile, offers domestic and international passenger and cargo air services. The company has a Zacks Rank #3 and an Earnings ESP of +20.00%, as the Most Accurate estimate of 12 cents is pegged 2 cents above the Zacks Consensus Estimate. The favorable combination makes an earnings beat likely. LATAM Airlines’ results should be out on May 8. Shares of the company have gained 9.6% on a year-to-date basis.
Our third choice in the list of potential outperformers is C.H. Robinson Worldwide, Inc. (CHRW - Free Report) . This Minnesota-based Zacks Rank #3 company is a third-party logistics player.It has an Earnings ESP of +0.17%. The favorable combination makes an earnings beat likely. The company’s results will be out on May 1. Shares of the company have increased 3.9% on a year-to-date basis.
Our final choice is Expeditors International of Washington, Inc. (EXPD - Free Report) , a leading third-party logistics provider. The company, based in Seattle, WA, is engaged in the business of global logistics management. This transportation player has a Zacks Rank #2 and an Earnings ESP of +2.09%. The Zacks Consensus Estimate, pegged at 64 cents, comes in a penny lower than the Most Accurate estimate.
The company will unveil its results on May 8. The stock has witnessed the Zacks Consensus Estimate for Q1 earnings being revised 3.2% upward over the last 60 days.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Will Q1 Earnings Deliver for These 4 Transportation Stocks?
The Q1 earnings season is unwinding fast with 154 S&P 500 companies (representing 37.9% of the total market capitalization of the coveted index) having reported results as of Apr 25. In fact, the picture that has evolved thus far is an extremely rosy one.
Per the latest Earnings Preview, total earnings for these companies have increased 25.4% year over year. Also, revenues for the same improved 10.3% on a year-over-year basis. Furthermore, 80.5% of these companies have outpaced earnings estimates and 72.1% surpassed top-line expectations.
What is even more encouraging is that this bull run is likely to continue for the rest of the Q1 reporting cycle. According to the above report, this earnings season seems to be well on track to register the highest level of year-over-year earnings growth in the last seven years. It also predicted that overall earnings for all the S&P 500 are expected to be up 20% on 8% growth in revenues. This bullish projection can be attributed to a corporate tax overhaul and relatively healthy job data.
Given the prevalent healthy scenario, it is quite natural that most sectors should deliver an impressive performance. In fact, per the above report, 15 of the 16 Zacks sectors are projected to end Q1 with earnings growth year over year. Moreover, most of those 15 sectors are projected to end Q1 with double-digit earnings growth.
One of these high-flying sectors is Transportation. Majority of the sector participants (57.1%) have already reported financial numbers. The performances of the S&P 500 transportation companies so far, indicate a 23.7% increase in total earnings year over year, with 75% outperforming on the bottom-line front. The members of this highly diversified sector are projected to end Q1 with earnings growth of 19.9%, much higher than the 3.5% in the final quarter of 2017.
Factors Responsible for Transports Flying High
It is a well-documented fact that stocks in the Transportation space had a rough time last year due to factors like hurricanes and public-relation related fiascos. Even though, headwinds like foul weather and high costs have hurt transports in Q1, sector participants managed to overcome the obstacles and perform well this earnings season.
Notably, factors like the new tax law, improved unit revenue scenario, thriving domestic economy and strong performance of the intermodal division have helped this key sector to perform well in Q1 reporting cycle.
Transports’ Bull Run Likely to Continue
With the Transportation sector very much in favor, it is likely that quite a few companies in this space that have not yet disclosed their quarterly numbers will report better-than-expected results in Q1. Given this backdrop, it seems to be a prudent idea to add such stocks to one’s portfolio now.
How to Make the Right Choice?
With multiple companies present in the Transportation space, the task of selecting the right stocks is by no means an easy one. The process is akin to searching for a needle in a haystack unless one is aware of an appropriate method to make the right choice.
One way to narrow down the list of choices is by looking at stocks with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they report with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology to determine which stocks have the best chance to surprise in their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination have the chance of a positive earnings surprise is as high as 70%.
An earnings beat boosts investor confidence in the stock, which is reflected in its rapid price appreciation.
4 Attractive Picks
With the aid of the above methodology, we have zeroed in on four transportation stocks that are likely to report better-than-expected earnings per share in Q1.
Copa Holdings, S.A. (CPA - Free Report) is a Panama City-based carrier. It has an Earnings ESP of +0.78%, as the Most Accurate estimate of $2.80 per share is above the Zacks Consensus Estimate by 2 cents. The company carries a Zacks Rank #3, which when combined with a positive ESP, makes us confident of an earnings beat. Copa Holdings will unveil its results on May 9. You can see the complete list of today’s Zacks #1 Rank stocks here.
Additionally, the carrier has an impressive earnings history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 5.5%.
LATAM Airlines Group S.A. , based in Santiago, Chile, offers domestic and international passenger and cargo air services. The company has a Zacks Rank #3 and an Earnings ESP of +20.00%, as the Most Accurate estimate of 12 cents is pegged 2 cents above the Zacks Consensus Estimate. The favorable combination makes an earnings beat likely. LATAM Airlines’ results should be out on May 8. Shares of the company have gained 9.6% on a year-to-date basis.
Our third choice in the list of potential outperformers is C.H. Robinson Worldwide, Inc. (CHRW - Free Report) . This Minnesota-based Zacks Rank #3 company is a third-party logistics player. It has an Earnings ESP of +0.17%. The favorable combination makes an earnings beat likely. The company’s results will be out on May 1. Shares of the company have increased 3.9% on a year-to-date basis.
Our final choice is Expeditors International of Washington, Inc. (EXPD - Free Report) , a leading third-party logistics provider. The company, based in Seattle, WA, is engaged in the business of global logistics management. This transportation player has a Zacks Rank #2 and an Earnings ESP of +2.09%. The Zacks Consensus Estimate, pegged at 64 cents, comes in a penny lower than the Most Accurate estimate.
The company will unveil its results on May 8. The stock has witnessed the Zacks Consensus Estimate for Q1 earnings being revised 3.2% upward over the last 60 days.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>