The Zacks Equity Research team has released an analysis spotlighting three transportation stocks that are anticipated to outperform expectations in their upcoming second-quarter earnings reports. The featured companies, Expeditors International of Washington (EXPD), GXO Logistics (GXO), and ZIM Integrated Shipping Services (ZIM), are poised for potentially positive surprises despite facing challenges such as weak freight demand and broader economic uncertainties.
Zacks notes that the overall transportation sector is expected to see a decline in second-quarter earnings by approximately 4.7% year over year, alongside a 0.5% drop in revenues. However, analysts are optimistic about the performance of these three firms for several reasons. A notable drop in oil prices, which fell by 6% during the April-June period, is likely to benefit their bottom lines as fuel costs represent a major expense in the transportation business.
Moreover, the continued strength of e-commerce and strategic cost management in light of reduced demand are factors expected to aid these companies’ earnings performance. Each of the highlighted firms has a solid history of exceeding earnings expectations. Expeditors, for instance, has consistently outperformed consensus estimates over the past four quarters, with an average surprise of 13.3%. GXO Logistics, benefiting from e-commerce growth and operational efficiency, has beaten estimates in three of its last four quarters, while ZIM has impressive earnings growth driven by an asset-light model and strategic investments in technology.
Investors are encouraged to explore these stocks, as the right combination of strong earnings potential and strategic positioning could yield positive results in the challenging current climate. The stock selection methodology employed by Zacks, which combines a favorable Earnings ESP and Zacks Rank, enhances the likelihood of identifying outperformers.
With the transportation sector’s resilience amid economic headwinds and evolving market conditions, there is a sense of cautious optimism for stakeholders as these companies prepare to disclose their financial results.