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Transport Stocks May 3 Earnings Lineup: XPO, MATX, AAWW

The Q1 earnings season is well past the half-way mark with 288 companies in the S&P 500 space, representing 63.8% in terms of market capitalization, having reported their quarterly numbers as of Apr 28. According to our Earnings Preview report, the picture to have emanated is an extremely healthy one with the top and bottom line for expanding 8.2% and 13.7%, respectively, on a year-over-year basis.

While 76.4% companies have outpaced the Zacks Consensus Estimate with respect to earnings, 68.1% topped expectations on the revenue front. In fact, 55.2% of the companies in the S&P 500 space outperformed both earnings and revenues. We expect to get a clearer picture by the end of the current week, which will see 1013 companies reporting their respective results that include 126 players in the S&P 500 space.

The above report predicts that the bottom and top line (in the S&P 500 Index) to expand 11.2% and 6.2%, respectively, at the end of the Q1 earnings season. Both figures compared favorably with  the readings in Q4, when bottom line expanded 7.4% (highest growth in almost two years) and revenues grew 4.8%.

Nevertheless, the transportation sector (one of the 16 Zacks sectors) does not share the rosy picture. The bottom line for the S&P 500 companies in this highly-diversified sector is projected to contract 17.7% at the end of Q1, due to higher costs. Notably, this reading compares unfavorably to the segmental bottom-line contraction of 18.2% in Q4.

In fact, we have already seen key sector participants like United Continental Holdings UAL, Ryder System R and Delta Air Lines DAL reporting significant year-over-year bottom-line decline in Q1. Increasing labor costs have hurt the bottom line for most of the sector participants, particularly airlines.

Given this backdrop, investors interested in the transportation space will keenly await the Q1 reports from sector participants like XPO Logistics, Inc. XPO, Matson, Inc. MATX and Atlas Air Worldwide Holdings, Inc. AAWW, scheduled for May 3.

According to our quantitative model, a company needs the right combination of 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.

In this context, the Buchanan, MI-based, XPO Logistics, Inc.s’ Zacks Rank # 3 and an Earnings ESP of +6.25% (the Most Accurate estimate exceeds the Zacks Consensus Estimate of 16 cents by a penny), makes us reasonably confident of an earnings beat.

XPO Logistics, Inc. Price and EPS Surprise


XPO Logistics, Inc. Price and EPS Surprise | XPO Logistics, Inc. Quote

Matson, Inc., an ocean transportation and logistics company, carries a Zacks Rank #2 (Buy). Nevertheless, its Earnings ESP of 0.00% (both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 15 cents per share) complicates our surprise prediction. You can see _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Matson, Inc. Price and EPS Surprise


Matson, Inc. Price and EPS Surprise | Matson, Inc. Quote

Also, Atlas Air Worldwide, Inc. that focuses on the airport-to-airport air transportation of heavy freight cargo through its subsidiaries is not likely to beat estimates this qaurter. This is because the company has an Earnings ESP of 0.00% (the Most Accurate estimate of 30 cents is in line with the Zacks Consensus Estimate) and a Zacks Rank #5 (Strong Sell).  

Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

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Delta Air Lines, Inc. (DAL): Free Stock Analysis Report
United Continental Holdings, Inc. (UAL): Free Stock Analysis Report
Ryder System, Inc. (R): Free Stock Analysis Report
Matson, Inc. (MATX): Free Stock Analysis Report
XPO Logistics, Inc. (XPO): Free Stock Analysis Report
Atlas Air Worldwide Holdings (AAWW): Free Stock Analysis Report
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