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Transportation Stocks Apr 22 Earnings Roster: DAL, CSX & More

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The first-quarter 2020 reporting cycle for the Zacks Transportation sector began last week on a fairly positive note despite the coronavirus rampage. Perhaps the impact from the health hazard will worsen in the second quarter.

Within the widely-diversified transportation sector, which houses airlines, railroads, shipping and trucking companies to name a few, J.B. Hunt Transport Services (JBHT - Free Report) kicked off the earnings season reporting lower-than-expected earnings but better-than-expected revenues. While the bottom line was affected by high costs, the top line benefited from impressive performances across all segments. The company’s Final Mile Services unit is experiencing quite a setback from the coronavirus due to temporary suspension of operations. Evidently, the segment incurred an operating loss of $3.3 million in the first quarter against an operating income of $0.2 million in the year-ago period.

Meanwhile railroad player Kansas City Southern surpassed on both earnings and revenues. Additionally, the company’s bottom line improved year over year on the back of better operational efficiency while the top line increased substantially, mainly owing to strong performances at the Chemicals and Petroleum as well as the Intermodal units.

What’s in Store for Other Players?

The Earnings Outlook (data as of Apr 16) suggests that earnings for the S&P 500 members of the transportation sector are anticipated to plunge 60.9% year over year in the March quarter while revenues are estimated to dip 2.6%. This compares with 4.1% decrease in earnings in the fourth quarter of 2019 and 1.7% rise in revenues in the same period.

This bleak forecast is a result of the coronavirus-related woes. Within the transportation sector, the airlines are expected to have witnessed the maximum downfall due to the global health peril. With massive capacity cuts on account of dwindling air-travel demand and government travel restrictions, passenger revenues (accounting for approximately 90% of the top line) are expected to have taken a hit. Low fuel prices are likely to have partly offset this adversity by aiding the bottom line as fuel expenses comprise a major chunk of airline expenditures.

As for railroads, the already low volume scenario due to freight softness is likely to have worsened by the coronavirus-induced supply-chain disruptions. However, cost-control measures, courtesy of the precision scheduled railroading model, are likely to have driven the railroads’ bottom line.

Weak freight demand is also expected to have weighed on trucking volumes, thus denting revenues of truck companies. However, cost-cutting measures exercised by the trucking companies are likely to reflect on earnings.

Against this backdrop, investors interested in the transportation sector will keenly await first-quarter reports from leading players, namely Delta Air Lines, Inc. (DAL - Free Report) , CSX Corporation (CSX - Free Report) , Knight-Swift Transportation Holdings Inc. (KNX - Free Report) and Landstar System, Inc. (LSTR - Free Report) on Apr 22.

Our quantitative model suggests that a company needs the right combination of the following two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Delta is a major airline company based in Atlanta, GA.
 
The company is not likely to beat on earnings in the first quarter as it has an Earnings ESP of -47.08% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earlier too, our model did not predict a beat for the company when we had issued our first-quarter earnings preview article. Back then, the stock had an Earnings ESP of -37.65% and the same Zacks Rank.

Delta Air Lines, Inc. Price and EPS Surprise

Delta Air Lines, Inc. Price and EPS Surprise

Delta Air Lines, Inc. price-eps-surprise | Delta Air Lines, Inc. Quote


CSX is a Jacksonville, FL-based company providing rail, intermodal and rail-to-truck transload services and solutions.

This company is unlikely to surpass earnings estimates in the first quarter as it has an Earnings ESP of -0.37% and a Zacks Rank #4 (Sell).
 
Previously too the model did not predict an earnings beat for the company when we had issued our first-quarter earnings preview article. The stock then had an Earnings ESP of -0.34% and the same Zacks Rank.

CSX Corporation Price and EPS Surprise

CSX Corporation Price and EPS Surprise

CSX Corporation price-eps-surprise | CSX Corporation Quote


Knight-Swift is a truckload carrier based in Phoenix, AZ.
 
This company is not likely to beat on earnings as it has an Earnings ESP of -1.39% and is Zacks #3 Ranked.


Landstar is an asset-light provider of integrated transportation management solutions, based in Jacksonville, FL.

With an Earnings ESP of -0.94% and a Zacks Rank of 4, this company is not expected to beat on earnings this time around.

Landstar System, Inc. Price and EPS Surprise

Landstar System, Inc. Price and EPS Surprise

Landstar System, Inc. price-eps-surprise | Landstar System, Inc. Quote

 

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