Transport Stocks Q2 Earnings In Queue: CHRW, HTLD & More

The ongoing Q2 earnings season has seen many releases so far from the widely diversified transportation sector. As of Jul 22, 66.7% of the sectoral participants in the S&P 500 space have reported their Q2 numbers as per our latest Earnings Trends report.

Although earnings growth rate is in the negative territory (15.7%), a healthy proportion (70%) of companies in the space has beaten the Zacks Consensus Estimate for earnings. The impressive earnings beat is due to the bottom-line outperformance by leading players like CSX Corporation (NASDAQ:CSX) , Delta Air Lines (NYSE:DAL) and United Continental Holdings (NYSE:UAL) .

However, due to the plethora of headwinds confronting the space like the surge in terror attacks, uncertainty following the Brexit vote and the declining coal shipments, to name a few, the sector is expected to end Q2 with negative earnings growth of 12.6%. In fact, earnings growth is expected to be -3.4% for the entire S&P 500 index in Q2 with nine of the 16 Zacks sectors projected to end the current earnings season with negative earnings growth.

The current week is going to be an eventful one with regards to earnings as over 950 companies will be releasing their quarterly numbers, including 189 S&P 500 members.

Investors interested in the transportation sector eagerly await the Q2 earnings releases by multiple sector participants on Jul 26. Let’s take a look at the possibilities of a beat or miss these players have.

MN-based C.H. Robinson Worldwide (NASDAQ:CHRW) is a third-party logistics company.Last quarter, the company posted a positive earnings surprise of 2.47%. Also, the company’s earnings surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 3.73% (read more: Can C.H. Robinson Q2 Earnings Spring a Surprise?).

Heartland Express, Inc. (NASDAQ:HTLD) , based in North Liberty, IO, operates as a short-to-medium haul truckload carrier of general commodities. Things, however, appear bleak for the trucking company. 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, Heartland Express has an Earnings ESP of -5.00% as the Most Accurate estimate is pegged at 19 cents while the Zacks Consensus Estimate is 1 cent higher. The company has a Zacks Rank #5 (Strong Sell). As it is, we caution against Sell-rated stocks going into the earnings announcement.

CAI International Inc. (NYSE:CAI) , based in San Francisco, CA, is a leading transportation finance and logistics company.The company’s Earnings ESP of 0.00% acts as a spoiler, making an earnings beat unlikely despite its Zacks Rank #3. This is because the Most Accurate estimate is in line with the Zacks Consensus Estimate of 40 cents.

DHT Holdings (NYSE:DHT) , based in Bermuda, is engaged in the refining of petroleum primarily in the U.S. The company is unlikely to record an earnings beat in the second quarter as it has an Earnings ESP of -3.33% and a Zacks Rank #4 (Sell). The negative earnings ESP is a result of the difference between the Most Accurate estimate of 29 cents and the Zacks Consensus Estimate of 30 cents.

Hub Group, Inc. (NASDAQ:HUBG) , based in Oak Brook, IL, is a transportation management company which offers multi-modal solutions throughout North America. The company has a Zacks Rank #3. However, the company’s Earnings ESP of 0.00% acts as a spoiler making an earnings beat unlikely in the second quarter. The Most Accurate estimate is the same as the Zacks Consensus Estimate of 57 cents, leading to an Earnings ESP of 0.00%.