ArcBest Corporation (ARCB - Free Report) is scheduled to release fourth-quarter 2018 results on Jan 30, after market close.
In the last reported quarter, the company delivered a positive earnings surprise of 30.9%. Additionally, it has an impressive track record with respect to earnings per share. ArcBest outshined the Zacks Consensus Estimate in each of the trailing four quarters, the average being more than 100%.
A history of positive earnings surprise generally works as a catalyst in sending a stock higher. It indicates the company’s ability to surpass the estimates.
In the past three months, ArcBest stock has gained 7.4% against its industry’s 0.4% decline.
Three-Month Price Performance
Given this bullish backdrop with respect to earnings surprises, investors are optimistic about a beat in the fourth quarter as well.
What Does the Zacks Model Say?
Adding to the buoyant scenario, our proven model shows that ArcBest is likely to beat estimates in the fourth quarter of 2018 owing to a perfect combination of the following two key ingredients:
Earnings ESP: ArcBest has an Earnings ESP of +4.78%. While the Most Accurate Estimate stands at 96 cents, the Zacks Consensus Estimate is pegged lower at 92 cents. A positive Earnings ESP is indicative of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: ArcBest carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have significantly higher chances of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.
Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Factors Likely to Influence Fourth-Quarter Results
In the quarter to be reported, ArcBest is likely to benefit from the impressive freight scenario in the United States. The robust freight demand should result in revenue growth from its asset-based business, which accounts for bulk of the company’s top line. The Zacks Consensus Estimate for fourth-quarter revenues from its asset-based business stands at $551 million, much higher than the $497 million registered a year ago.
Also, total billed revenue per hundredweight on asset-based shipments should increase driven by the company’s asset-based pricing initiatives. The Zacks Consensus Estimate for the metric (excluding fuel charges) is pinned at $35.22, much higher than the $32.34 registered a year ago.
Backed by greater efficiencies, the segment’s operating ratio (operating expenses as a percentage of revenues) should improve in the to-be-reported quarter. The Zacks Consensus Estimate for the metric stands at 94%, lower than the 96% a year ago. Notably, lower the value of the ratio the better.
However, operating expenses are likely to increase significantly in the fourth quarter mainly due to higher salaries and wages. This, in turn, is likely to weigh on the company’s bottom-line growth.
Other Stocks to Consider
Investors interested in the Zacks Transportation sector may also check the following companies as they like ArcBest too possess the right combination of elements to beat estimates in the upcoming releases:
Expeditors International of Washington (EXPD - Free Report) has an Earnings ESP of +0.39% and a Zacks Rank #1. The company will release fourth-quarter 2018 results on Feb 19.
SkyWest (SKYW - Free Report) has an Earnings ESP of +2.77% and a Zacks Rank #2. The company will release fourth-quarter 2018 results on Jan 31.
Hawaiian Holdings (HA - Free Report) has an Earnings ESP of +1.63% and a Zacks Rank #3. The company will release fourth-quarter 2018 results on Jan 29.
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