Delta Air Lines DAL kicked off the fourth-quarter 2021 earnings season for the transportation sector on Jan 13, 2022. The airline behemoth fared well reporting better-than-expected earnings per share and revenues. Upbeat passenger traffic during the holiday period aided results.
Although Delta’s management expects the carrier to incur a loss in the March quarter due to omicron-related woes, outlook for rest of the year is bright. DAL anticipates delivering a profit in the other three quarters of 2022. The impressive earnings report and the bullish long-term forecast boosted the DAL stock post the result announcement.
Following Delta, a plethora of transportation stocks is scheduled to release fourth-quarter financial numbers over the next month or so. Against this backdrop, investors interested in the Transportation sector would like to add stocks like Expeditors International of Washington EXPD, Copa Holdings CPA and ArcBest Corporation ARCB to their respective portfolios for higher returns.
Our latest earnings preview indicates that earnings of the transportation sector are likely to have registered a huge jump in the final quarter of 2021 from the year-ago actuals, notwithstanding the current omicron-led crisis. 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 uptick in trading volumes is likely to have aided the earnings picture of this widely-diversified transportation sector, particularly those in the railroad and shipping industry. The fourth-quarter performance of airlines in the sector is likely to have benefited from increased passenger volume. Other airlines like Delta also might anticipate the omicron impact to be short term than long
Moreover, upbeat freight demand, driven by increased consumer spending, construction and manufacturing activities, is likely to have aided the performance of trucking stocks in the December quarter. Additionally, the declining trend in growth with respect to oil price is also likely to have bolstered the bottom-line performance of the transportation stocks in the fourth quarter. This is because fuel expenses represent one of the highest input costs for these companies. Evidently, oil price inched up 0.3% in the quarter to be reported from the sequential quarter’s reading. The oil price increase is lower than the 2.1% rise in the third quarter compared with the second-quarter levels.
Against this backdrop, 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. Moreover, each of the stocks has a positive Earnings ESP, making an earnings beat likely. The combination of a positive Earnings ESP and a Zacks Rank #1, 2 or even 3 (Hold) increases the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Expeditors currently has an earnings ESP of +2.97% and a Zacks Rank #1. EXPD is being bolstered by upbeat airfreight revenues. Like the first three quarters of 2021, we expect airfreight revenues to aid Expeditors’ fourth-quarter 2021 results (scheduled to be out on Feb 22, 2022).
Shares of Expeditors have surged 30.8% in a year’s time. The optimism surrounding the stock is evident from the 2.5% northbound revision of the Zacks Consensus Estimate for the December-quarter earnings over the past 60 days.
Copa Holdings with a Zacks Rank #2 at present and an Earnings ESP of +11.01% is slated to release fourth-quarter 2021 results on Feb 9. Driven by factors like ramped-up vaccination, economic activities are slowly picking up the pace, buoying consumer confidence in Latin America. As a result, passenger revenues are likely to have improved at this Latin American carrier in the December quarter.
Copa Holdings has an impressive earnings surprise history wherein its bottom line outshined the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark in the remaining quarter. Shares of CPA have gained 9.8% in a year’s time.
ArcBest Corporation currently has an Earnings ESP of +2.56% and is presently Zacks #2 Ranked. ARCB’s earnings trumped the Zacks Consensus Estimate in each of the trailing four quarters, the average being 27.4%. The Zacks Consensus Estimate for ARCB’s December quarter earnings has been revised 0.91% upward in the past 60 days.
Shares of ArcBest have skyrocketed 185.5% so far this year. Improving freight conditions in the United States is likely to have aided ARCB’s fourth-quarter performance. Solid customer demand and higher market rates are also likely to have supported results (scheduled to be out on Feb 2, 2022).
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Delta Air Lines, Inc. (DAL): Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD): Free Stock Analysis Report
Copa Holdings, S.A. (CPA): Free Stock Analysis Report
ArcBest Corporation (ARCB): Free Stock Analysis Report
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