We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can These 4 Transportation Stocks Hit Q2 Earnings Targets?
Read MoreHide Full Article
The widely diversified Zacks Transportation sector is facing multiple headwinds, ranging from inflation-induced elevated interest rates and weak freight demand to supply-chain woes. Geopolitical uncertainties and higher inflation continue to hurt consumer sentiment and growth expectations.
Although inflation is cooling, the reading continues to be above the Fed’s long-term goal. As a result, the Fed is expected to hold interest rates higher for longer. Elevated interest rates do not bode well for the economy, as the same curtails consumer outlays and increases borrowing costs.
Apart from high interest rates, the freight market downturn, driven by excess freight capacity than freight volumes, has hit the sector hard.
However, the decline in expenses on fuel represents another tailwind for the industry. Notably, oil prices declined almost 1.9% in the April-June 2024 period. As fuel expenses represent a key input cost for any transportation player, the decline in oil prices bodes well for the bottom-line growth of railroad stocks.
Improvement in the demand scenario from the pandemic lows is a major positive. The uptick in trading volumes is likely to have aided the performance of transportation companies in the soon-to-be-reported quarter.
Against this backdrop, investors interested in the Zacks Transportation sector are keenly waiting for the second-quarter 2024 results of Union Pacific (UNP - Free Report) , Norfolk Southern (NSC - Free Report) , Southwest Airlines (LUV - Free Report) and American Airlines (AAL - Free Report) , scheduled to be released on Jul 25, 2024.
Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Let’s delve deeper.
Union Pacific is grappling with a freight market downturn. Below-par freight rates are hurting Union Pacific's prospects. To mitigate the revenue decline from the freight downturn, Union Pacific focuses on cost-cutting measures to improve its bottom line in the second quarter.
The Zacks Consensus Estimate for UNP’s soon-to-be reported quarter’s earnings has been revised downward by 2.17% in the past 60 days to $2.70 per share. The Zacks Consensus Estimate for revenues is pegged at $6.06 billion, which indicates growth of 1.62% from the year-ago levels.
Weak freight conditions are likely to have hurt Norfolk Southern’s top line in the to-be-reported quarter. Further, inflation-related woes are likely to have brought about a reduction in consumer demand for goods, in turn affecting freight volumes hauled by rail.
The Zacks Consensus Estimate for revenues is pegged at $3.02 billion, indicating a 1.42% rise from the year-ago reported level. The top line is likely to have been affected by the performances of all three key segments — Merchandise, Intermodal and Coal.
Moreover, the northward movement in operating expenses (driven by the increase in labor costs) is likely to have adversely impacted NSC’s bottom line in the second quarter of 2024. The Zacks Consensus Estimate for Norfolk Southern’s soon-to-be reported quarter’s earnings has been revised downward by 3.71% in the past 60 days to $2.85 per share.
Our proven model does not conclusively predict an earnings beat for NSC this earnings season. NSC has an Earnings ESP of -0.00% and a Zacks Rank #4 (Sell) at present. When the second-quarter 2024 earnings preview article was issued, NSC had an Earnings ESP of -1.80% and a Zacks Rank of 4.
Norfolk Southern Corporation Price and EPS Surprise
Southwest Airlines expects its second-quarter capacity or available seat miles (ASMs) to improve 8-9% from the year-ago reported figure. For third-quarter 2024, LUV anticipates capacity to increase in the low-single digits, and for the fourth quarter of 2024, LUV expects capacity to decrease in the low to mid-single digits. For 2024, management has reaffirmed its capacity expectation to improve 4% on a year-over-year basis.
The Zacks Consensus Estimate for LUV’s second-quarter 2024 revenues is pegged at $7.35 billion, indicating 4.45% year-over-year growth. The top line is likely to have been aided by healthy leisure demand and continued yield strength.
Higher expenses and interest expense are likely to weigh on LUV’s bottom line. Notably, the Zacks Consensus Estimate for LUV’s second-quarter 2024 earnings has been revised downward by 36.2% in the past 90 days to 51 cents per share. Moreover, the consensus mark implies a 53.21% decline from the year-ago actuals.
Our proven model does not conclusively predict an earnings beat for Southwest Airlines this season as it has an Earnings ESP of -22.71% and a Zacks Rank #4 at present.
American Airlines’ top-line performance in the second quarter is expected to have benefited from upbeat air-travel demand, particularly on the domestic front. Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn strengthening total revenues.
The Zacks Consensus Estimate for second-quarter 2024 revenues is currently pegged at $14.42 billion, indicating a 2.60% uptick from the year-ago actuals. The Zacks Consensus Estimate for AAL’s second-quarter 2024 earnings is currently pegged at $1.04 per share and has been revised downward by 20.61% in the past 60 days. Additionally, the consensus mark implies a 45.83% decline from the year-ago actuals.
Our proven model does not conclusively predict an earnings beat for AAL this season as it has an Earnings ESP of -0.52% and a Zacks Rank #5 (Strong Sell) at present.
American Airlines Group Inc. Price and EPS Surprise
Image: Bigstock
Can These 4 Transportation Stocks Hit Q2 Earnings Targets?
The widely diversified Zacks Transportation sector is facing multiple headwinds, ranging from inflation-induced elevated interest rates and weak freight demand to supply-chain woes. Geopolitical uncertainties and higher inflation continue to hurt consumer sentiment and growth expectations.
Although inflation is cooling, the reading continues to be above the Fed’s long-term goal. As a result, the Fed is expected to hold interest rates higher for longer. Elevated interest rates do not bode well for the economy, as the same curtails consumer outlays and increases borrowing costs.
Apart from high interest rates, the freight market downturn, driven by excess freight capacity than freight volumes, has hit the sector hard.
However, the decline in expenses on fuel represents another tailwind for the industry. Notably, oil prices declined almost 1.9% in the April-June 2024 period. As fuel expenses represent a key input cost for any transportation player, the decline in oil prices bodes well for the bottom-line growth of railroad stocks.
Improvement in the demand scenario from the pandemic lows is a major positive. The uptick in trading volumes is likely to have aided the performance of transportation companies in the soon-to-be-reported quarter.
Against this backdrop, investors interested in the Zacks Transportation sector are keenly waiting for the second-quarter 2024 results of Union Pacific (UNP - Free Report) , Norfolk Southern (NSC - Free Report) , Southwest Airlines (LUV - Free Report) and American Airlines (AAL - Free Report) , scheduled to be released on Jul 25, 2024.
Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Let’s delve deeper.
Union Pacific is grappling with a freight market downturn. Below-par freight rates are hurting Union Pacific's prospects. To mitigate the revenue decline from the freight downturn, Union Pacific focuses on cost-cutting measures to improve its bottom line in the second quarter.
The Zacks Consensus Estimate for UNP’s soon-to-be reported quarter’s earnings has been revised downward by 2.17% in the past 60 days to $2.70 per share. The Zacks Consensus Estimate for revenues is pegged at $6.06 billion, which indicates growth of 1.62% from the year-ago levels.
Our proven model does not conclusively predict an earnings beat for UNP this earnings season as it has an Earnings ESP of -0.16% and a Zacks Rank #3 at present. When the second-quarter 2024 earnings preview article was issued, UNP had an Earnings ESP of -0.49% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Union Pacific Corporation Price and EPS Surprise
Union Pacific Corporation price-eps-surprise | Union Pacific Corporation Quote
Weak freight conditions are likely to have hurt Norfolk Southern’s top line in the to-be-reported quarter. Further, inflation-related woes are likely to have brought about a reduction in consumer demand for goods, in turn affecting freight volumes hauled by rail.
The Zacks Consensus Estimate for revenues is pegged at $3.02 billion, indicating a 1.42% rise from the year-ago reported level. The top line is likely to have been affected by the performances of all three key segments — Merchandise, Intermodal and Coal.
Moreover, the northward movement in operating expenses (driven by the increase in labor costs) is likely to have adversely impacted NSC’s bottom line in the second quarter of 2024. The Zacks Consensus Estimate for Norfolk Southern’s soon-to-be reported quarter’s earnings has been revised downward by 3.71% in the past 60 days to $2.85 per share.
Our proven model does not conclusively predict an earnings beat for NSC this earnings season. NSC has an Earnings ESP of -0.00% and a Zacks Rank #4 (Sell) at present. When the second-quarter 2024 earnings preview article was issued, NSC had an Earnings ESP of -1.80% and a Zacks Rank of 4.
Norfolk Southern Corporation Price and EPS Surprise
Norfolk Southern Corporation price-eps-surprise | Norfolk Southern Corporation Quote
Southwest Airlines expects its second-quarter capacity or available seat miles (ASMs) to improve 8-9% from the year-ago reported figure. For third-quarter 2024, LUV anticipates capacity to increase in the low-single digits, and for the fourth quarter of 2024, LUV expects capacity to decrease in the low to mid-single digits. For 2024, management has reaffirmed its capacity expectation to improve 4% on a year-over-year basis.
The Zacks Consensus Estimate for LUV’s second-quarter 2024 revenues is pegged at $7.35 billion, indicating 4.45% year-over-year growth. The top line is likely to have been aided by healthy leisure demand and continued yield strength.
Higher expenses and interest expense are likely to weigh on LUV’s bottom line. Notably, the Zacks Consensus Estimate for LUV’s second-quarter 2024 earnings has been revised downward by 36.2% in the past 90 days to 51 cents per share. Moreover, the consensus mark implies a 53.21% decline from the year-ago actuals.
Our proven model does not conclusively predict an earnings beat for Southwest Airlines this season as it has an Earnings ESP of -22.71% and a Zacks Rank #4 at present.
Southwest Airlines Co. Price and EPS Surprise
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
American Airlines’ top-line performance in the second quarter is expected to have benefited from upbeat air-travel demand, particularly on the domestic front. Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn strengthening total revenues.
The Zacks Consensus Estimate for second-quarter 2024 revenues is currently pegged at $14.42 billion, indicating a 2.60% uptick from the year-ago actuals. The Zacks Consensus Estimate for AAL’s second-quarter 2024 earnings is currently pegged at $1.04 per share and has been revised downward by 20.61% in the past 60 days. Additionally, the consensus mark implies a 45.83% decline from the year-ago actuals.
Our proven model does not conclusively predict an earnings beat for AAL this season as it has an Earnings ESP of -0.52% and a Zacks Rank #5 (Strong Sell) at present.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.