A high proportion of companies belonging to the Zacks Transportation sector have already reported their financial numbers this earnings season. However, quite a few transportation stocks are yet to report earnings results.
Among the transportation companies slated to post earnings figures, there are some Latin American airline stocks like Copa Holdings (CPA - Free Report) and LATAM Airlines (LTM - Free Report) . In addition, most shipping companies are yet to make earnings announcements.
Given this backdrop, let’s delve deep to analyze the factors that might have impacted the quarterly performance of the transportation companies, which are lined up for earnings releases.
Thanks to the economic progress in Latin America, strong passenger revenues are likely to have aided the fourth-quarter performance of the above-mentioned carriers. However, adverse foreign-currency movements are likely to have dented their performances.
Further, carriers like Copa have Boeing 737 MAX jets in the fleet, which have been grounded for quite some time now. Notably, the grounding is likely to have resulted in capacity reduction. Moreover, non-fuel unit costs are likely to have flared up in the December-end quarter due to lower capacity, in turn, straining the bottom line.
Additionally, impressive Dry bulk shipping rates for most of the October-December period are anticipated to have boosted the quarterly performance of most shipping stocks.
How to Pick Winners?
The above write-up clearly suggests that despite a few hiccups, there are several tailwinds for transport players to brighten their earnings picture.
However, given the presence of multiple players in the sector, choosing stocks with earnings beat potential might be a difficult task unless one knows the process to shortlist. One way to do it is by picking stocks that have the combination of a favorable Zacks Rank — Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their upcoming 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, the chance of a positive earnings surprise is as high as 70%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
For investors seeking to apply this proven model to their portfolio, we have highlighted four Transportation stocks that are poised to beat fourth-quarter earnings estimates.
Los Angeles, CA-based Air Lease Corporation (AL - Free Report) is a leading aircraft leasing company. Higher revenues from the rental of flight equipment are likely to have boosted the company’s fourth-quarter performance.
Air Lease has an Earnings ESP of +0.73% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a decent earnings surprise history, having outshined the Zacks Consensus Estimate in three of the trailing four quarters and missing the mark in the other. It is scheduled to announce quarterly numbers on Feb 14.
Azul (AZUL - Free Report) is one of the largest airlines in Brazil in terms of departures and destinations covered, offering flights to every region in the country. Azul’s December-end quarter performance is likely to reflect benefits of stellar passenger revenues, thanks to strong air-travel demand.
Azul has an Earnings ESP of +16.13% and sports a Zacks Rank #1, at present. The company has a decent earnings surprise history, having outpaced estimates in three of the trailing four quarters and missing the mark in the other. The company is slated to release earnings results on Mar 12.
Scorpio Tankers (STNG - Free Report) is a provider of marine transportation of petroleum products worldwide. The company has an Earnings ESP of +2.94% and carries a Zacks Rank of 2, currently.
Scorpio Tankers has a decent earnings surprise history, having beaten the Zacks Consensus Estimate in three of the trailing four quarters and missing the mark in one. It will report fourth-quarter financial figures on Feb 19.
GOL Linhas Aéreas Inteligentes (GOL - Free Report) , headquartered in São Paulo, Brazil, serves more than 33 million passengers per year. GOL Linhas has an Earnings ESP of +16.88% and holds a Zacks Rank #2, currently. Over the preceding four quarters, the carrier surpassed estimates on two occasions, reported in-line earnings in the other two and missed estimates in another.
Capacity discipline and high passenger revenues are likely to have aided GOL Linhas’ fourth-quarter 2019 performance. Detailed results should be out on Feb 20.
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