What's in Store for These 5 Transportation Stocks in Q1 Earnings?

The Zacks Transportation sector is widely diversified. It houses airlines, railroads, shipping and trucking companies to name a few.

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.

However, high fuel costs are likely to have hurt the first-quarter performance of transportation companies. Fuel expenses represent a key input cost for any transportation player. High oil prices are resulting in an increase in fuel costs. In first-quarter 2024, oil prices increased 16%.

The transportation sector has also been plagued by a labor crisis, due to which costs are on the rise. High labor costs are also expected to have impacted the bottom-line numbers in the to-be-reported quarter.

Against this backdrop, investors interested in the Zacks Transportation sector are keenly waiting for the results of United Parcel Service UPS, Norfolk Southern NSC, Union Pacific UNP, Southwest Airlines LUV and American Airlines AAL, scheduled to be released during the course of this week.

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.

UPS’ bottom-line performance in the quarter under review is likely to have been hurt by high labor costs. The labor deal inked with International Brotherhood of Teamsters last year is likely to have increased labor costs. High fuel costs are expected to have affected the bottom line as well.

Apart from the adverse effects of labor negotiations, weakening demand due to economic slowdown is expected to have resulted in a decline in the volume of packages shipped. UPS is scheduled to release first-quarter 2024 results on Apr 23.

Our proven model does not conclusively predict an earnings beat for UPS this earnings season as it has an Earnings ESP of -3.24% and a Zacks Rank #3 at present. The readings were the same when the first-quarter 2024 earnings preview article was issued. 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 and EPS Surprise

United Parcel Service, Inc. price-eps-surprise | United Parcel Service, Inc. Quote

We expect Norfolk Southern’s performance to have been affected by soft revenues due to weak freight demand. Softness in overall volumes due to headwinds like weak freight conditions, supply-chain woes and slower network velocity are likely to have hurt the top line.

Our proven model does not conclusively predict an earnings beat for NSC this earnings season. NSC has an Earnings ESP of -0.45% and a Zacks Rank #3 at present. When the first-quarter 2024 earnings preview article was issued, NSC had an Earnings ESP of -0.31% and a Zacks Rank #3. NSC is scheduled to release first-quarter 2024 results on Apr 24.

Norfolk Southern Corporation Price and EPS Surprise

Norfolk Southern Corporation Price and EPS Surprise

Norfolk Southern Corporation price-eps-surprise | Norfolk Southern Corporation Quote

Like Norfolk Southern, Union Pacific’s performance is also likely to have been affected by soft revenues due to weak freight demand. Freight revenues account for the bulk of the top line. We expect freight revenues in the first quarter of 2024 to decrease 2.4% from the fourth-quarter 2023 actuals.

Our proven model does not conclusively predict an earnings beat for UNP this earnings season as the company has an Earnings ESP of -0.81% and a Zacks Rank #3 at present. When the first-quarter 2024 earnings preview article was issued, UNP had an Earnings ESP of +0.61% and a Zacks Rank #3. UNP is scheduled to release first-quarter 2024 results on Apr 24.

Union Pacific Corporation Price and EPS Surprise

Union Pacific Corporation Price and EPS Surprise

Union Pacific Corporation price-eps-surprise | Union Pacific Corporation Quote

We expect Southwest Airlines’ performance in first-quarter 2024 to have been aided by healthy air travel demand and yield strength. However, high fuel and labor costs are likely to have been the major negatives.

Our proven model predicts an earnings beat for LUV this earnings season as the airline has an Earnings ESP of +2.14% and a Zacks Rank #3 at present. The readings were the same when the first-quarter 2024 earnings preview article was issued. LUV is scheduled to release first-quarter 2024 results on Apr 25.

Southwest Airlines Co. Price and EPS Surprise

Southwest Airlines Co. Price and EPS Surprise

Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote

We expect upbeat air travel demand, particularly on the domestic front, to have boosted American Airlines’ top-line performance in the to-be-reported quarter. Passenger revenues, which account for the bulk of the top line, are likely to have been high, strengthening total revenues. Per our model, passenger revenues in the first quarter of 2024 are likely to have increased 2.5% from the first-quarter 2023 actuals.

Our proven model predicts an earnings beat for AAL this earnings season as the airline has an Earnings ESP of +6.51% and a Zacks Rank #3 at present. The readings were the same when the first-quarter 2024 earnings preview article was issued. AAL is scheduled to release first-quarter 2024 results on Apr 25.

American Airlines Group Inc. Price and EPS Surprise

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.

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Southwest Airlines Co. (LUV) : Free Stock Analysis Report

Union Pacific Corporation (UNP) : Free Stock Analysis Report

Norfolk Southern Corporation (NSC) : Free Stock Analysis Report

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

American Airlines Group Inc. (AAL) : Free Stock Analysis Report

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Zacks Investment Research

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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