Transportation Stocks' Jul 20 Q2 Earnings Roaster: AAL, CSX & KNX
The Zacks Transportation sector is widely diversified. It houses airlines, railroads, shipping and trucking companies, to name a few.
The gradual uptick in the economic scenario implies that trading volumes are consistently rising. This bodes well for the entire sector.
However, economic uncertainty might have affected the second-quarter performance. Headwinds like supply-chain woes, inflationary pressure and high fuel costs, a key input cost for any transportation player, are likely to have hurt the second-quarter 2023 performance of transportation companies.
Given this backdrop, investors interested in the Zacks Transportation sector keenly await the results of American Airlines Group Inc. AAL, CSX Corporation CSX and Knight-Swift Transportation Holdings Inc. KNX, scheduled to be released on Jul 20.
Our quantitative model predicts earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). 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.
We expect upbeat air-travel demand, particularly on the domestic front, to have boosted American Airlines’ top-line performance in the to-be-reported quarter. Passenger revenues, which account for the bulk of the top line, are likely to have been high, boosting total revenues. Driven by the uptick, AAL expects second-quarter 2023 adjusted operating margin in the range of 12.5-14.5%. Owing to upbeat traffic, load factor (percentage of seats filled by passengers) is likely to have been impressive in the June quarter.
Our proven model predicts earnings beat for American Airlines this season as AAL has an Earnings ESP of +0.53% and a Zacks Rank #3 at present. Our model predicted a positive surprise for AAL earlier as well, when its second-quarter earnings preview article was issued. At that time, AAL had an Earnings ESP of +2.69%, while the Zacks Rank was #3.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
We expect coal revenues to have been impressive primarily due to high export-coal prices in second-quarter 2023, in turn aiding CSX’s performance. We estimate coal revenues to increase 18.1% during second-quarter 2023 from second-quarter 2022 actuals. Moreover, supply-chain disruptions including labor and equipment shortages are expected to have hurt CSX’s second-quarter performance.
Our proven model does not conclusively predict an earnings beat for CSX this season as the company has an Earnings ESP of -0.68% and a Zacks Rank #3 at present. Our model did not predict a positive surprise for CSX earlier as well, when its second-quarter earnings preview article was issued. At that time, CSX had the same Earnings ESP and Zacks Rank.
CSX Corporation Price and EPS Surprise
CSX Corporation price-eps-surprise | CSX Corporation Quote
Knight-Swift’s second-quarter 2023 performance is expected to have been weighed down by the soft ness pertaining to freight demand. Driver shortage continues to be a major challenge for the trucking industry. As old drivers retire, trucking companies find it difficult to hire drivers since the job does not appeal to the younger generation. Further, escalating operating expenses, led by high fuel costs, are likely to have dented the prospects of the truck transport providers. High costs related to driver wages, equipment, maintenance, fuel and other expenses are likely to have restricted Knight-Swift’s bottom-line growth.
Our proven model does not conclusively predict an earnings beat for KNX this season as the company has an Earnings ESP of -19.08% and a Zacks Rank #3 at present. Notably, our model had also not predicted a positive surprise for KNX earlier as well, when its second-quarter earnings preview article was issued. At that time too, KNX had an Earnings ESP of -19.08% and a Zacks Rank #3.
Knight-Swift Transportation Holdings Inc. Price and EPS Surprise
Knight-Swift Transportation Holdings Inc. price-eps-surprise | Knight-Swift Transportation Holdings Inc. Quote
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CSX Corporation (CSX) : Free Stock Analysis Report
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