The Zacks Transportation sector is widely diversified in nature. It houses airlines, railroads, shipping and trucking companies to name a few.
Quite a few transportation players already reported their earnings numbers in the ongoing earnings season. There have been quite a few earnings beats so far on the back of improved economic conditions. The gradual recovery in the economic scenario implies that trading volumes are rising. This bodes well for the entire sector. The latest Earnings Outlook indicates that the total earnings of transports belonging to the S&P 500 universe in fourth-quarter 2021 are likely to increase massively from the year-ago reported levels, mainly on the uptick in economic activities.
With the reopening of economies, economic activities gained pace, courtesy of large-scale vaccination programs. Administered with jabs, people are now more confident of going out and resuming their daily activities.
The above scenario is projected to favorably impact the fourth-quarter 2021 results of C.H. Robinson Worldwide CHRW, Old Dominion Freight (NASDAQ:ODFL) Line ODFL and Allegiant Travel Company (NASDAQ:ALGT) ALGT, scheduled to be released on Feb 2.
Our quantitative model predicts an earnings beat for the company with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) as this combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Let’s delve deeper.
C.H. Robinson’s results are likely to reflect the improving freight-market conditions in the United States. Favorable truckload pricing and an increase in less than truckload (LTL) volumes are expected to have boosted revenues in the North American Surface Transportation division, the primary revenue generator at CHRW. However, supply-chain related woes might dampen results.
Our proven Zacks model predicts an earnings beat for C.H. Robinson this season as CHRW has an Earnings ESP of +4.79% and a Zacks Rank #3 at present. In fact, our model had predicted a positive surprise for CHRW earlier as well when its fourth-quarter earnings preview article was issued.
Like C.H. Robinson, Old Dominion Freight Line’s fourth-quarter results are also likely to reflect the gradual uptick in economic activities following the resumption of the same. Driven by economic growth in the United States, there is a continued improvement in freight demand, which is likely to have aided Old Dominion’s performance. However, higher operating expenses (stemming from higher fuel costs, salaries, wages and benefits) are likely to have hurt ODFL’s bottom line.
Our proven Zacks model does not predict an earnings beat for Old Dominion Freight Line this season as ODFL has an Earnings ESP of -0.51% and a Zacks Rank of 3 at present. In fact, our model had not predicted a positive surprise for ODFL even while issuing its fourth-quarter earnings preview article .
Allegiant Travel’s fourth-quarter performance is likely to have been dented by rising fuel costs. The Zacks Consensus Estimate for fuel price per gallon (system-wide) for the to-be-reported quarter is currently pegged at $2.55, well above $2.20 reported in third-quarter 2021. Escalating expenses on salary and benefits are also likely to have stressed the bottom line.
However, Allegiant Travel’s fourth-quarter 2021 performance is likely to have been boosted by upbeat passenger revenues. Strong holiday travel demand is likely to have driven passenger revenues. However, our proven Zacks model does not predict an earnings beat for ALGT this season as the same has an Earnings ESP of +1.26% and a Zacks Rank #5 (Strong Sell) at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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