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The majority of players in the widely diversified Zacks Transportation sector have already released fourth-quarter 2024 results. The percentage of companies beating earnings estimates is impressive so far.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Among transportation companies that are yet to report fourth-quarter numbers, we expect the likes of Air Canada ACDVF, Controladora Vuela Compañía de Aviación, S.A.B. de C.V. VLRS, popularly known as Volaris, and Golar LNG GLNG to report better-than-expected earnings despite weak freight demand, supply-chain woes and inflation-induced economic uncertainty.
A Look at the Major Q4 Tailwinds for Transportation Stocks
Upbeat passenger volumes during the holiday season have been a huge positive, aiding the top-line performance of the airline companies in the space.
While air travel demand has remained strong on the leisure front, the fact that travel demand on the international front is upbeat has also helped. For example, Chicago-based United Airlines’ UAL transatlantic bookings for 2024 winter were 30% higher than pre-COVID levels.
The solid growth in unit revenues is backed by consistent travel demand and benefits from the successful execution of tactical actions (which includes improving network optimization and capacity rationalization). The sharp reduction in airline seats in the U.S. market, which has driven up ticket prices, has boosted the top-line performance of carriers in the final quarter of 2024.
The fourth-quarter performance of transportation stocks has also been aided by prudent cost-management actions. To mitigate the ills associated with lackluster freight demand, many companies in the sector are cutting costs. Moreover, the fact that e-commerce is still a force to reckon with bodes well.
Here’s How to Pick the Right Stocks
Quite a few transportation stocks are likely to report earnings shortly. It is always a daunting task for investors to pick a winning basket of stocks with the potential to deliver better-than-expected earnings.
While there is no foolproof method of choosing outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks with high chances of delivering a positive surprise in their upcoming earnings announcement. Our research shows that for stocks with this perfect mix of elements, the odds of an earnings beat are as high as 70%.
Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.