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Shipping Stocks Reporting Earnings Next Week: NVGS, NMM, NAT

The Q1 earnings season is over as far as S&P 500 players in the transportation space are concerned. According to the latest Earnings Trends Report, the growth rate for earnings in this widely diversified sector is +2.9% with an impressive 85.7% companies reporting better-than-expected earnings in the quarter. The impressive proportion of companies beating earnings estimates is due to the plain and simple fact of estimates being trimmed significantly over the past few months reflecting the overall challenging environment.

However, the overall earnings growth rate is still negative as per the report. In fact, 8 of the 16 Zacks sectors are expected to end Q1 with earnings growth in the negative territory. That transportation has managed to display positive bottom-line growth (in the S&P space) is mainly due to cheap oil. Fuel costs form a significant portion of operating expenses for any player in the transportation space. Consequently, the drop in oil prices has come in as a blessing for transportation players.

Major transportation players like Delta Air Lines DAL and American Airlines Group AAL have reported better-than-expected earnings in Q1, thanks to low fuel costs. Even though bottom-line performance has been quite impressive for transportation players, the picture is gloomy with respect to revenues. As has been the case in the past few quarters, the S&P 500 members of this sector have seen top-line contraction this time too. Revenues have declined 1.1% on a year-over-year basis.

With all the S&P 500 members in the transportation sector having already reported their quarterly numbers, there are only a few companies remaining to report from this space. Most of the “still-to-report” companies are shipping stocks. In fact, the shipping industry is going through tough times due to low freight rates, overcapacity, a dearth of bank financing, among other headwinds.

In the light of these challenging factors, let’s take a peek into how 3 shipping stocks are poised ahead of their first-quarter results.

Things look rosy for shipping player Navigator Holdings Ltd. NVGS, based in London, as it has the right combination of two key ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – necessary for increasing the odds of an earnings surprise.

The Earnings ESP for Navigator Holdings is +5.26% as the Most Accurate estimate is 2 cents higher than the Zacks Consensus Estimate of 38 cents. Moreover, the company has a Zacks Rank #3.

Founded in 2007 and based in Monte Carlo, Monaco, Navios Maritime Partners L.P. NMM is not likely to beat earnings.The Earnings ESP for Navios Maritime Partners is 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 7 cents. The company has a Zacks Rank #3 but that alone is not sufficient to secure an earnings beat.

Our quantitative model does not conclusively show an earnings beat for Hamilton, Bermuda-based company Nordic American Tankers Limited NAT as well. The Earnings ESP for Nordic American Tankers is -3.23% as the Most Accurate estimate is 1 cent lower than the Zacks Consensus Estimate of 31 cents. Meanwhile, the company has a Zacks Rank #2 which alone is not enough for an earnings beat.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
DELTA AIR LINES (DAL): Free Stock Analysis Report
NORDIC AMERICAN (NAT): Free Stock Analysis Report
AMER AIRLINES (AAL): Free Stock Analysis Report
NAVIOS MARIT LP (NMM): Free Stock Analysis Report
NAVIGATOR HLDGS (NVGS): Free Stock Analysis Report
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