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Transportation Stocks Q3 Earnings on Oct 24: NSC, UPS & More

The third-quarter earnings season is gaining momentum with 84 S&P 500 members having reported results until Oct 19. These 84 members account for 22.3% of the index's total market capitalization. Earnings for the companies have risen 19.2% year over year on 8.4% increase in revenues. Moreover, 82.1% of the companies beat on earnings while 61.9% surpassed on revenues.

Per the latest Earnings Preview , more than 600 companies will be reporting financial numbers this week including 154 S&P 500 members. Combining actual results from the 84 reported members and the estimates of pending 416 companies, total earnings are expected to be up 19.2% from the same period last year on 7.2% higher revenues. Moreover,10 of the 16 Zacks sectors are projected to witness double-digit earnings growth.

One of these is the transportation sector wherein earnings are predicted to expand 22.6% while revenues are anticipated to rise 9.5%. The impressive forecasts compare favorably even with those achieved in the last reported quarter. During the second quarter, earnings for the sector climbed 16.2% on 8.7% higher revenues.

Within the widely diversified transportation sector, railroads have been benefiting from encouraging volume growth. Notably, key sector participant Kansas City Southern KSU recently reported third-quarter earnings figures wherein both the top and the bottom line rose 6.5% and 16.3%, respectively, on a year-over-year basis owing to a 4% rise in overall carload volumes. Additionally, package delivery companies like United Parcel Service, Inc. UPS are thriving on rapid growth in e-commerce.

However, the truck companies are struggling with an acute driver shortage and a subsequent restraint on the truck count. As far as airlines are concerned, the escalating fuel prices remain a major concern for the industry as fuel comprises a major chunk of airline expenditures. In fact, the spike in fuel price is not only affecting the airlines but also gripping the entire transportation sector. This is because fuel costs have a substantial bearing on the entire sector.

Given this backdrop, investors interested in the transportation space will keenly await third-quarter reports from leading players like UPS, Norfolk Southern Corporation NSC , Allegiant Travel Company ALGT and Knight-Swift Transportation Holdings Inc. KNX come Oct 24.

Per our quantitative model, 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 an earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Norfolk Southern is primarily engaged in the rail transportation of raw material, intermediate products and finished goods, primarily in the Southeast, East and Midwest United States. The company is not likely to beat on earnings in the third quarter despite carrying a Zacks Rank #2 (Buy) as it has an Earnings ESP of -0.14%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

In fact, our model did not predict an earnings beat for the company even when we issued our third-quarter earnings preview article. At that time, the stock had an Earnings ESP of 0.00%, even though the Zacks Rank remained the same.

Norfolk Southern Corporation Price and EPS Surprise

Norfolk Southern Corporation Price and EPS Surprise | Norfolk Southern Corporation Quote

UPS is the world's largest express carrier and package delivery company. The company provides specialized transportation and logistics services in the United States and internationally. It is not likely to beat estimates in the third quarter despite carrying a favorable Zacks Rank #3 as it has an Earnings ESP of -0.97%. The negative ESP is because the Most Accurate Estimate is pegged at $1.79 per share while the Zacks Consensus Estimate stands higher at $1.81.

However, when we issued our third-quarter earnings preview article, our model had predicted a beat for this company. This was because the stock then had an Earnings ESP of +0.69% with the same Zacks Rank.

United Parcel Service, Inc. Price and EPS Surprise

United Parcel Service, Inc. Price and EPS Surprise | United Parcel Service, Inc. Quote

Allegiant Travel operates a low-cost passenger airline through its subsidiary Allegiant Air LLC. It focuses on linking leisure travelers from small and medium sized cities to world-class leisure destinations. The company is unlikely to beat on earnings in the third quarter as it has an Earnings ESP of 0.00% with both the Most Accurate Estimate and the Zacks Consensus Estimate pegged at $1.02 per share. Allegiant Travel carries a Zacks Rank of 3. (Read more: Allegiant Travel Q3 Earnings: What's in the Offing? )

Allegiant Travel Company Price and EPS Surprise

Allegiant Travel Company Price and EPS Surprise | Allegiant Travel Company Quote

Knight-Swift is the largest truckload carrier in North America. The company based in Phoenix, AZ, also provides transportation solutions. It is not likely to surpass expectations in the impending third-quarter earnings release as it has an Earnings ESP of -0.60% and a Zacks Rank #4 (Sell).

Knight-Swift Transportation Holdings Inc. Price and EPS Surprise

Knight-Swift Transportation Holdings Inc. Price and EPS Surprise | Knight-Swift Transportation Holdings Inc. Quote

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Allegiant Travel Company (ALGT): Free Stock Analysis Report

Kansas City Southern (KSU): Free Stock Analysis Report

Norfolk Southern Corporation (NSC): Free Stock Analysis Report

Knight-Swift Transportation Holdings Inc. (KNX): Free Stock Analysis Report

United Parcel Service, Inc. (UPS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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