Transport Stock Earnings Lineup For Next Week: NNA, CGI & NM

The Q2 earnings season is drawing to a close with 454 S&P 500 members (accounting for 92.1% of market capitalization) having reported their quarterly numbers, as per our latest Earnings Trends report (data as of Aug 10). The quarterly releases so far highlight an improvement over the preceding quarter’s results. Per the report, the entire S&P 500 cohort is expected to end the current earnings season with a bottom-line decline of 3.4% on a year-over-year basis. The top line is expected to shrink 0.4% for the index. The projections reflect an improvement over the 1Q16 figures wherein earnings deteriorated 6.5% and revenues declined 0.9%.

As has been the case in the past few quarters, the biggest drag on the bottom line has come from the Energy sector with sector earnings expected to contract 78.9% in Q2 and revenues projected to plunge 26% at the end of the current reporting cycle. The report suggests that seven of the 16 Zacks sectors are expected to end Q2 with negative earnings growth.

One of those seven sectors is the widely diversified Transportation space which has already seen quarterly reports from all of its S&P 500 members. Given the number of headwinds facing the sector participants, like the surge in terror attacks, declining coal shipments, uncertainty following the Brexit vote, labor strife, technological failure and the spread of the Zika virus to Florida, it is no surprise that this sector has posted a weaker quarter in comparison to 1Q16. Transportation earnings growth (in the S&P 500 space) is a dismal -12.4% this earnings season as against +3.3% in 1Q16. The top line has shrunk 1.3% in Q2 compared with a deceleration of only 0.9% in 1Q16.

There are a few non-S&P 500 transport stocks that are yet to reveal their quarterly numbers. Below, we highlight three such companies which are expected to report next week.

Navios Maritime Acquisition Corporation (NYSE:NNA) provides marine transportation services. It is an owner and operator of tanker vessels focusing on the transportation of petroleum products and bulk liquid chemicals. 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. However, Navios Maritimehas an Earnings ESP of -36.36% as the Most Accurate estimate lags the Zacks Consensus Estimate of 11 cents by 4 cents. Also, the company has a Zacks Rank #4 (Sell). The unfavorable combination makes an earnings beat unlikely for the second quarter, results of which will be disclosed on Aug 18. Please note that we caution against Sell-rated stocks going into the earnings announcement.

Celadon Group (NYSE:CGI) offers transportation services in countries including the U.S., Canada and Mexico. The company has an Earnings ESP of 0.00% as the Most Accurate estimate is in line with the Zacks Consensus Estimate of 20 cents. The company has a Zacks Rank #5 (Strong Sell). The unfavorable combination makes an earnings beat unlikely for the fourth quarter of fiscal 2016. Results are expected to be revealed on Aug 17.

Navios Maritime Holdings Inc. (NYSE:NM) operates as a seaborne shipping and logistics company which focuses on transportation and shipment of dry bulk commodities, including iron ore, coal, and grains.The company carries a Zacks Rank #3. However, its Earnings ESP of 0.00% (the Most Accurate estimate being in line with the Zacks Consensus Estimate) dims possibilities of an earnings beat in the second quarter of 2016, results of which are expected on Aug 18.