The Zacks Transportation sector is widely diversified in nature. It houses airlines, railroads, shipping and trucking companies to name a few.
The third-quarter 2019 earnings season is underway for this key sector with reports available from S&P 500 members like Delta Air Lines DAL, United Airlines, CSX Corporation CSX, Union Pacific Corporation UNP and Kansas City Southern KSU. Results have been impressive so far on the bottom-line front with the likes of Delta, United Airlines, CSX and Kansas City Southern reporting better-than-expected earnings per share on the back of mainly lower costs.
Per the latest Earnings Outlook, total earnings of transports belonging to the S&P 500 universe are projected to increase 6.5% year over year in the current reporting cycle. The figure indicates a rise from 5.1% bottom-line growth reported by the S&P 500 transports in the preceding earnings season.
Given this backdrop, let’s delve deeper and analyse the factors likely to have influenced the third-quarter 2019 performance of three transportation companies that are scheduled to announce results on Oct 22.
United Parcel Service UPS: Alike the last few quarters, e-commerce growth is likely to have aided this Atlanta-based company’s third quarter as well. The same is expected to have expanded package volumes at the U.S. Domestic Package segment.
However, due to UPS’ substantial exposure in China, the Sino-US trade tussle is likely to have caused some sluggishness in third-quarter international package volumes. Moreover, with UPS investing significantly in its facilities’ upgrade to meet the surge in demand following rapid growth in e-commerce, its bottom line is expected to reflect the impact of surging capital expenditures in the to-be-reported results.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $18.3 billion, suggesting 4.9% growth from the year-ago reported number. Further, the consensus estimate for earnings stands at $2.06 per share, indicating a13.2% rise from the prior-year reported number.
Our proven model does not conclusively predict an earnings beat for UPS this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of beating estimates. However, UPS has an Earnings ESP of -1.38% and a Zacks Rank #3. (Read more: Will Low International Package Volumes Mar UPS' Q3 Earnings?).
You can see the complete list of today’s Zacks #1 Rank stocks here.
United Parcel Service, Inc. Price and EPS Surprise
United Parcel Service, Inc. price-eps-surprise | United Parcel Service, Inc. Quote
JetBlue Airways Corporation JBLU: Similar to the first two quarters of 2019, a healthy uptick in passenger revenues owing to strong demand for air travel is likely to have boosted the company's third-quarter performance. Passenger revenue figures are also likely to reflect the impact of robust traffic during summer.
Low fuel costs are expected to have aided the carrier’s third-quarter 2019 bottom line. The Zacks Consensus Estimate for third-quarter fuel cost per gallon is currently pegged at $2.18, implying a decline of 6% from the year-ago reported figure. However, JetBlue’s bottom line is expected to reflect the impact of high non-fuel costs in the to-be-reported results.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $2.1 billion, hinting at 3.8% growth from the year-earlier reported number. Further, the consensus estimate for earnings is pegged at 53 cents per share, indicating a 23.3% rise.
Our proven model does not conclusively predict an earnings beat for JetBlue this time around. This is because the carrier has an Earnings ESP of -3.33% and a Zacks Rank of 3. (You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.)
JetBlue Airways Corporation Price and EPS Surprise
JetBlue Airways Corporation price-eps-surprise | JetBlue Airways Corporation Quote
Hawaiian Holdings HA: Low fuel costs are likely to have favored the carrier’s third-quarter bottom line. The Zacks Consensus Estimate for third-quarter fuel cost per gallon is currently pegged at $2.11, suggesting a decline of 6.7% from the year-ago reported figure.
The Zacks Consensus Estimate for third-quarter 2019 revenues is pegged at $748.1 billion, implying a 1.5% dip from the year-earlier reported number. The decline is mainly due to intensified competition at Hawaiian Holdings’ primary market — Hawaii — following Southwest Airlines' entry in the region earlier this year. Further, the consensus estimate for earnings is pinned at $1.61 per share, hinting at a 15.7% decrease.
Our proven model predicts an earnings beat for Hawaiian Holdings in the third quarter. This is because the company has an Earnings ESP of +4.98% and a Zacks Rank #2.
Hawaiian Holdings, Inc. Price and EPS Surprise
Hawaiian Holdings, Inc. price-eps-surprise | Hawaiian Holdings, Inc. Quote
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