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3 Transportation Stocks to Bet on Before Q1 Earnings Release

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Delta Air Lines DAL will kick off the first-quarter 2022 earnings season for the transportation sector on Apr 13, 2022. The airline behemoth’s first-quarter performance is likely to have been aided by an upbeat air traffic as air-travel demand (mainly for leisure) picks up. However, high fuel costs are likely to have hurt its bottom-line performance.

After Delta, a plethora of transportation stocks is expected to release the first-quarter financial numbers over the next month or so. Though high fuel costs are a bane for the stocks in this sector as fuel expenses represent a major input cost for any transportation player, we believe that the reopening of economies and the pick-up in trading activities are likely to have aided the first-quarter performance of the sector participants. Against this backdrop, investors interested in the Transportation sector would do well to add stocks like Union Pacific Corporation UNP, Expeditors International of Washington EXPD and Ryder System R to their respective portfolios for higher returns.

Our latest earnings preview indicates that bottom line of the transportation sector is likely to have registered a massive jump in the first quarter of 2022 from the fourth-quarter 2021 actuals, notwithstanding the northward movement in oil price, which escalated 33% in first-quarter 2022, led by the Russia-Ukraine war.

The uptick in trading volumes is likely to have aided the earnings picture of this widely-diversified transportation sector. Administered with jabs, people are now more confident of going out and resuming their daily activities. With economic activities on an upswing, the freight scenario is on the mend. Better freight conditions in the United States can be gauged from the improvement of the Cass Freight Shipments index in four of the last five months on a month-over-month basis. The latest reading is from February, suggesting 8.6% growth from the January tally.

In the light of the above, we believe, investors should add transportation stocks to their portfolios. Below we present three stocks from the sector, currently carrying either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Expeditors currently sports a Zacks Rank of1. EXPD is being bolstered by upbeat airfreight revenues. We expect this uptrend in airfreight revenues to aid the first-quarter 2022 results (scheduled to be out on May 3, 2022) akin to all the four quarters’ performances in 2021.

The wave of optimism surrounding the EXPD stock is evident from the 11.05% northbound revision of the Zacks Consensus Estimate for its March-quarter earnings over the past 60 days.

Ryder currently flaunts a Zacks Rank #1. Improving economic and freight market conditions in the United States are likely to have aided R’s first-quarter performance. Detailed results will be out on Apr 27.

Strong used vehicle sales are likely to have lifted R’s first-quarter performance. The Zacks Consensus Estimate for Ryder’s first-quarter 2022 earnings has been revised 11.3% upward in the past 60 days.

Union Pacific, based in Omaha, NE, provides rail transportation services across the United States. Improvement in freight conditions is likely to have boosted UNP’s first-quarter results as freight revenues account for the bulk of this railroad operator’s top line. Detailed results will be out on Apr 21.

The Zacks Consensus Estimate for Union Pacific’s first-quarter 2022 earnings has been revised 1.2% upward in the past 60 days. Shares of this Zacks Rank #2 stock increased more than 16% over the past year.


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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
Ryder System, Inc. (R) : Free Stock Analysis Report
 
Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
 
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