5 Transportation Stocks Set to Beat on Q2 Earnings This Month
Most sectors in the United States suffered severe setbacks in the second quarter thanks to coronavirus-induced lockdowns, and the transportation sector was no exception.
Consequently, the consensus estimate of this earnings session is highly disappointing. However, a handful of transportation stocks with a favorable Zacks Rank is set to beat earnings estimates this month.
Transportation Sector in Q2 2020
The coronavirus pandemic spelt doom for companies in the transportation sector due to supply-chain disruptions. The resultant slowdown in domestic and global trade hurt earnings results of most sector participants.
Sluggish freight shipments do not bode well for transporters. The already weak volume scenario due to lingering trade conflict between the United States and China has aggravated following the coronavirus crisis. Most companies are seeing softness in truckload and railcar volumes due to weak freight market conditions.
The airlines and air-cargo industries suffered significantly due to travel restrictions imposed by almost all countries globally as well as domestically. In order to maintain social distancing work from remote places has become a new norm, which has drastically reduced business-related travel.
Consequently, some of the companies that are engaged in the business of global logistics management, including international freight forwarding and consolidation, for both air and ocean freight faced considerable hurdles in staying afloat. These third-party logistics companies offer innovative supply chain solutions like product sourcing, warehousing and freight shipping.
Disappointing Expectations for Second-Quarter Earnings
As of Jul 15, 32 S&P 500 members reported second-quarter 2020 earnings results. Total earnings of these companies are down 54.3% from the same period last year on 3.4% lower revenues. Of the total, 71.9% surpassed EPS estimates and 59.4% outpaced revenue estimates.
Overall, second-quarter earnings for the S&P 500 Index are projected to be down 44.9% year over year on 10.5% lower revenues. Notably, first-quarter earnings of companies on the S&P 500 Index were down 13.5% on 1.4% higher revenues. (Read More: Q2 2020 Earnings Season Gets Underway)
Our Top Picks
We have narrowed down our search to five transportation stocks. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to soar after earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our five picks in the last quarter.
Marten Transport Ltd. MRTN operates as a temperature-sensitive truckload carrier for shippers in the United States, Canada, and Mexico. It operates through four segments: Truckload, Dedicated, Intermodal, and Brokerage. The Zacks Rank # 2 company has an Earnings ESP of +4.35%.
The Zacks Consensus Estimate for Marten Transport's current-year earnings has improved 3.2% over the last 30 days. It has a trailing four-quarter earnings surprise of 3.8%, on average. The company is set to release earnings results on Jul 16, after the closing bell.
Canadian National Railway Co. CNI operates the larger of Canada's two principal railroads and the only coast-to-coast railroad network in North America. The company's rail network serves major ports in Canada and includes strategic connections to the United States. The Zacks Rank #2 company has an Earnings ESP of +4.35%.
The Zacks Consensus Estimate for Canadian National Railway's current-year earnings has improved 0.3% over the last 7 days. It has a trailing four-quarter earnings surprise of 7.5%, on average. The company is set to release earnings results on Jul 21, after the closing bell.
TFI International Inc. TFII provides transportation and logistics services in the United States, Canada, and Mexico. It operates through Package and Courier, Less-Than-Truckload, Truckload and Logistics segments. The Zacks Rank #1 company has an Earnings ESP of +14.58%.
The Zacks Consensus Estimate for TFI International's current-year earnings has improved 0.5% over the last 7 days. It has a trailing four-quarter earnings surprise of 26.5%, on average. The company is set to release earnings results on Jul 21, after the closing bell.
Canadian Pacific Railway Ltd. CP is North America's first transcontinental freight railway between the United States and Canada. This is the only transcontinental railway carrier with direct service to the U.S. Eastern Seaboard. The Zacks Rank #1 company has an Earnings ESP of +1.36%.
The Zacks Consensus Estimate for Canadian Pacific Railway's current-year earnings has improved 0.7% over the last 7 days. It has a trailing four-quarter earnings surprise of 4.9%, on average. The company is set to release earnings results on Jul 22, before the opening bell.
Werner Enterprises Inc. WERN is engaged in transporting truckload shipments of general commodities in interstate and intrastate commerce in the United States, Mexico, Canada, China, and internationally. It operates in two segments, Truckload Transportation Services and Werner Logistics. The Zacks Rank #2 company has an Earnings ESP of +3.89%.
The Zacks Consensus Estimate for Werner Enterprises' current-year earnings has improved 1.6% over the last 7 days. It has a trailing four-quarter earnings surprise of 4.9%, on average. The company is set to release earnings results on Jul 29, after the closing bell.
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