Transportation Stock Q3 Earnings on Oct 28: UPS, ALGT & More

Maharathi Basu

Tue, Oct 27, 2020, 11:44 AM5 min read

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The Zacks Transportation Sector is widely diversified in nature. It comprises airlines, railroads, shipping and trucking companies to name a few.

It is no secret that the above sector has been hit hard by the coronavirus pandemic. Similar to the first two quarters of 2020, the transportation players who already reported their third-quarter results, suffered a setback due to coronavirus-related headwinds. While declining passenger revenues due to lackluster air-travel demand hurt earnings performances of airlines like Delta Air Lines DAL, lackluster overall volumes due to coronavirus-induced supply-chain disruptions affected the financial numbers of railroads like Union Pacific Corporation UNP.

The coronavirus-related woes are also likely to upset the third-quarter results of those transportation players, who will report shortly. The latest Earnings Preview suggests that the bottom line of transport stocks under the S&P 500 universe is projected to plummet 123.5% from the year-ago recorded figure this reporting cycle.

Despite the headwinds, some factors like modest fuel prices and the surge in e-commerce demand are favoring the sector participants and are likely to have aided their third-quarter performance.

Against this backdrop, investors will keenly await the third-quarter earnings releases of United Parcel Service UPS, Allegiant Travel Company ALGT, Spirit Airlines SAVE, Norfolk Southern Corporation NSC, Werner Enterprises WERN and Ryder System R, which are scheduled to be announced on Oct 28.

Our quantitative model indicates that a company needs the right combination of the following two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

United Parcel Service: The exponential e-commerce growth rate in the current scenario is likely to drive the third-quarter results of this currently Zacks Rank #2 (Buy) Atlanta-based company. UPS has an Earnings ESP of +4.52% as the Most Accurate Estimate is higher than the Zacks Consensus Estimate of $1.82 by 8 cents. The favorable combination makes an earnings beat likely for UPS.

United Parcel Service, Inc. Price and EPS Surprise

United Parcel Service, Inc. price-eps-surprise | United Parcel Service, Inc. Quote

Allegiant Travel Company: Softness in air-travel demand due to the pandemic is likely to have dented Allegiant’s third-quarter performance by weakening passenger revenues. However, low fuel costs are likely to have supported its bottom-line performance.

The proven Zacks model does not predict an earnings beat for Allegiant this time around. This is because Allegiant has an Earnings ESP of -0.85% and a Zacks Rank #4 (Sell), currently.

Allegiant Travel Company Price and EPS Surprise

Allegiant Travel Company price-eps-surprise | Allegiant Travel Company Quote

Spirit Airlines: Like Allegiant, low passenger revenues due to deflated air-travel demand are expected to have ailed Spirit’s third-quarter performance. However, moderate fuel costs are likely to have contributed to the bottom line.

The proven Zacks model does not predict an earnings beat for Spirit this time around. This is because Spirit has an Earnings ESP of -0.45% and a Zacks Rank of 4, currently.

Spirit Airlines, Inc. Price and EPS Surprise

Spirit Airlines, Inc. price-eps-surprise | Spirit Airlines, Inc. Quote

Norfolk Southern: We expect Norfolk Southern's third-quarter 2020 results to take a hit from tepid volumes. However, reduced costs, courtesy of the precision scheduled railroading model, might have boosted the bottom line.

The proven Zacks model does not predict an earnings beat for Norfolk Southern this time around. The company has an Earnings ESP of 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate of $2.36. However, it carries a Zacks Rank of 3, currently.

Norfolk Southern Corporation Price and EPS Surprise

Norfolk Southern Corporation price-eps-surprise | Norfolk Southern Corporation Quote

Werner Enterprises: We expect Werner’s third-quarter 2020 results to get an impetus from its efforts to control costs. The improved freight demand scenario may also produce encouraging results.

The proven Zacks model predicts an earnings beat for the company this season. This is because Werner has an Earnings ESP of +2.78% and a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Werner Enterprises, Inc. Price and EPS Surprise

Werner Enterprises, Inc. price-eps-surprise | Werner Enterprises, Inc. Quote

Ryder System: We expect Ryder System’s third-quarter 2020 results to be aided by the company’s strategic measures to rein in costs. However, sluggish rental demand due to coronavirus-inflicted downsides is likely to mar the company’s earnings prospects.

The proven Zacks model does not predict an earnings beat for Ryder this time around. The company presently has an Earnings ESP of 0.00% and a Zacks Rank of 2.

Ryder System, Inc. Price and EPS Surprise

Ryder System, Inc. price-eps-surprise | Ryder System, Inc. Quote

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Transportation Stock Q3 Earnings on Oct 28: UPS, ALGT & More

United Parcel Service, Inc. Price and EPS Surprise

Allegiant Travel Company Price and EPS Surprise

Spirit Airlines, Inc. Price and EPS Surprise

Norfolk Southern Corporation Price and EPS Surprise

Werner Enterprises, Inc. Price and EPS Surprise

Ryder System, Inc. Price and EPS Surprise

Just Released: Zacks’ 7 Best Stocks for Today

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