Air Transportation Stocks Q3 Earnings On Nov 3: AAWW, ATSG

The Q3 earnings season is turning out to be a highly successful one, particularly in terms of bottom-line growth. According to our latest Earnings Preview report, 332 companies in the S&P 500 space that reported their quarterly results as of Nov 1, displayed bottom-line growth of 1.9% on a year-over-year basis. The top line has inched up 1.3% from the year-ago period, per the report.

With a deluge of earnings reports will continue through this week with more than 1000 companies (including 130 S&P 500 members) scheduled to report Q3 numbers in the coming days. According to the report, the current earnings season is set to become the first one to report bottom-line growth after five consecutive quarters of earnings decline. The S& P 500 Index is projected to end Q3 with earnings growth of 2.1%.

Despite the overall air of optimism, the earnings picture for the transportation sector (one of the 16 Zacks sectors) is not quite satisfactory. Thanks to the multiple headwinds facing the sector, transportation stocks are projected to end Q3 with significant bottom-line deterioration.

Though the bulk of the transportation earnings reports are already on board, a few of the sector participants are yet to disclose their quarterly numbers. Let’s take a look at how transportation companies like Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) and Air Transport Services Group (NASDAQ:ATSG) are expected to fare when they announce their Q3 results on Nov 3.

Both these companies belong to the Transportation-Air Freight segment, which carries a Zacks Industry Rank of 114 (out of more than 260 groups). The relatively better rank than other transportation subgroups like Airline – which has a rank of #235 – is attributable to the strong quarterly performance of industry bigwigs like United Parcel Service (NYSE:UPS) and FedEx (NYSE:FDX) FDX. The upcoming holiday season should also provide a boost to players in the Air Freight segment.

Atlas Air Worldwide focuses on the airport-to-airport air transportation of heavy freight cargo through its subsidiaries. The company is not likely to beat estimates in Q3, as per our quantitative model. This is because the company does not have 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 company has an Earnings ESP of 0.00% (the Most Accurate Estimate is in-line with the Zacks Consensus Estimate of $1.18 per share). Atlas Air Worldwide’s 0.00% ESP complicates our surprise prediction in spite of it carrying a favorable Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Based in Wilmington, OH, Air Transport Services Group is an aircraft leasing company. The company has a Zacks Rank # 4 (Sell). We caution investors against considering Sell-rated stocks (Zacks Rank #4 and 5) going into an earnings announcement. This apart, the company has an Earnings ESP of 0.00% (both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 15 cents).

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

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