A majority of players in the widely-diversified Zacks Transportation sector have already released second-quarter 2024 results. While the picture with respect to earnings growth remains dismal, as expected, the percentage of companies beating earnings estimates is impressive.

Among transportation companies yet to report second-quarter numbers, we expect the likes of  Expeditors International of Washington (EXPD Quick QuoteEXPD - Free Report) , Copa Holdings (CPA Quick QuoteCPA - Free Report) , and ZIM Integrated Shipping Services (ZIM Quick QuoteZIM - Free Report) to report better-than-expected earnings despite high fuel costs, supply-chain woes and inflation-induced economic uncertainty.

Let’s discuss the factors that are likely to have boosted the sector participants’ second-quarter performance.

For shipping companies in the sector, bullishness surrounding the containership market is a tailwind. A ramp-up of manufacturing activities in Asia aids the containership market besides other factors. Favorable market conditions in the dry bulk sector are also likely to have aided their performance in the to-be-reported quarter. Factors like a build-up of iron ore inventories in China have resulted in higher capesize freight rates.

For airlines, the strong bounce back in air travel demand from the pandemic lows is expected to aid the yet-to-report airline companies’ results. Strong passenger volumes are likely to have driven results, thanks to the summer season falling partially in the June quarter. What is more encouraging is that international demand has also bounced back.

Efforts to control costs for bottom-line growth amid the prevalent freight demand weakness are also likely to have aided the players’ performances. Moreover, the fact that e-commerce is still a force to reckon with bodes well.

Here’s How to Pick the Right Stocks

Quite a few transportation stocks are likely to report earnings shortly. It is always a daunting task for investors to pick a winning basket of stocks with the potential to deliver better-than-expected earnings.

While there is no foolproof method of choosing outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks with high chances of delivering a positive surprise in their upcoming earnings announcement. Our research shows that for stocks with this perfect mix of elements, the odds of an earnings beat are as high as 70%.

Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Our Choices

Expeditors currently has an Earnings ESP of +2.22% and a Zacks Rank of 2. EXPD is slated to report second-quarter 2024 results on Aug 6.

While weak volumes (with respect to air-freight tonnage and ocean containers) stemming from soft demand and declining rates are likely to have hurt EXPD’s performance, efforts to cut costs in the face of demand weakness are likely to have driven the bottom line.

EXPD beat the Zacks Consensus Estimate in only one of the last four quarters, missing the mark thrice. The average miss is 3.4%.

Copa Holdings has an Earnings ESP of +1.55% and a Zacks Rank #3 at present. The company is scheduled to report second-quarter 2024 earnings on Aug 7.

CPA surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 20.2%. Upbeat air travel demand is likely to have aided results.

ZIM Integrated Shipping Services has an Earnings ESP of +73.05% and a Zacks Rank #2 at present. Continued fleet expansion initiatives are likely to have driven the company’s performance. Moreover, reduced container availability due to Red Sea tensions resulted in higher freight costs. This is likely to have aided ZIM’s performance, which provides service to East Mediterranean and Israeli ports. 

ZIM beat the Zacks Consensus Estimate in only one of the last four quarters, missing the mark thrice. The average miss is 26.9%. The company is scheduled to report second-quarter 2024 earnings results on Aug 19.