Welcome!

News Feed Item

Zacks Investment Ideas feature highlights: Southwest Airlines, Norfolk Southern and Canadian Pacific Railway

CHICAGO, Jan. 17, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Southwest Airlines Co. (NYSE:LUV-Free Report), Norfolk Southern Corporation (NYSE:NSC-Free Report) and Canadian Pacific Railway Limited (NYSE:CP-Free Report).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Wheels Roll in Transportation, 3 Stocks Set to Beat

In the wake of the World Bank's revised outlook on the global economy, we are hopeful that the fourth quarter results of the U.S. stocks will bring the mojo back for investors, who have otherwise endured significant volatilities throughout 2013. Further, encouraging U.S. retail data that uplifted the greenback leaves little scope for any pessimism going forward.

The transportation sector too will benefit from the broader optimism and we look forward to outperformance by some of its stocks. Not only does the current momentum in the macro economy work in favour of these stocks, the industry fundamentals also continue to improve. From a modest beginning to a strong third quarter, these stocks have proved their mettle, driving us to crown them as our top picks.

Why Transportation is an Attractive Bet?

While fourth quarter results are underway, we are yet to see the major actions in Transportation with only 9.1% of the sector participants having reported. Overall, the sector is expected to register a double-digit (17%) earnings improvement, stemming from steady growth in airlines and railroad stocks.

According to the International Air Transport Association (IATA), the 2014 outlook on the global airline industry looks promising with profitability estimated at $16.4 billion on a passenger count of 3.30 billion. Net profit margin is also expected to grow 2.2%. Economic recovery and the resultant surge in air travel demand, disciplined capacity and many new and enhanced ancillary revenue opportunities would contribute to growth this year.

Railroads' operating performance too seems to have bounced back amid coal woes thanks to operational efficiency, increased market demand for intermodal services as well as shipment of key commodities like petroleum products, automotives and grain crop.

In such a scenario, it might be a good idea to zero-in on a handful of transportation stocks that are poised to beat earnings estimates this quarter. An earnings surprise should help these stocks outperform in the near term.

How to Find a Top Pick

Stock diversity in the transportation arena could muddle up your picking power. An easy way to narrow down the list for your portfolio is to take a look at stocks with solid Zacks Rank and favorable Zacks Earnings ESP.

Earnings ESP is our proprietary methodology for determining stocks having the best chance to surprise with their next earnings announcement. The earnings ESP shows the percentage difference between the Most Accurate estimate and the Zacks Consensus.

The combination of a positive to neutral Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive earnings ESP, is usually a harbinger of earnings beat.

For investors seeking to benefit by applying this strategy, we have chosen three transportation stocks that we believe will exhibit significant upward potential following their upcoming earnings announcement.

Southwest Airlines Co. (NYSE:LUV-Free Report): Dallas-based Southwest Airlines provides low cost passenger air transportation services in the U.S. It primarily provides short-haul, high frequency, point-to-point airline services covering many secondary or downtown airports such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore/Washington International, Burbank, Manchester, Oakland and San Jose. In May 2011, Southwest completed the acquisition of AirTran Holdings, which now operates as a wholly owned subsidiary under the name AirTran Airways. As of Sep 30, 2013, Southwest operated 696 Boeing aircraft and served 97 destinations along with AirTran.

The Zacks Consensus Estimates for fourth-quarter is 28 cents, representing robust growth over the year-ago quarter. The company registered an average earnings surprise of 41.40% over the trailing 12 months. 

The company presently carries a Zacks Rank #1 and has an earnings ESP of +7.14%. Southwest Airlines is set to report its fourth quarter results on Jan 23, before the opening bell.

Norfolk Southern Corporation (NYSE:NSC-Free Report): Headquartered in Norfolk, Virginia, Norfolk Southern Corp. owns a major freight railroad Norfolk Southern Railway, which also represents a Class I railroad in the U.S. The company operates over 20,000 route miles across 22 Eastern states in the U.S. The company offers rail transportation of commodities like coal and other raw materials, intermediate products and finished goods. It also offers comprehensive logistics and most extensive intermodal services on the Eastern part of the U.S. and caters to overseas freight through several Atlantic and Gulf Coast ports.

The Zacks Consensus Estimate for the fourth quarter is $1.50. This represents a year-over-year improvement of 15.7%. The company delivered average earnings surprise of 5.01% over the trailing 12 months.

Norfolk Southern has an earnings ESP of +0.67% and retains a Zacks Rank #3 (Hold). The company is slated to release its fourth quarter results on Jan 22.

Canadian Pacific Railway Limited (NYSE:CP-Free Report):  Based in Calagary, Alberta, Canadian Pacific is another Class I railroad  that provides rail freight transportation services to the principal business centers of Canada from Montreal to Vancouver, as well as the U.S. covering major cities like Chicago, New York City, Detroit and Minneapolis. The company has extended its network through collaborations with other Class I railways in North America, which allows it to provide services and access to markets across North America beyond its own rail network.

Currently, the Zacks Consensus Estimate for fourth-quarter is $1.87 with growth expectation of 46.3% from the prior-year quarter. The company boasts an average earnings surprise of 1.49% over the trailing 12 months. 

Canadian Pacific currently holds a Zacks Rank #3 and has an earnings ESP of +1.60%. The carrier is slated to report its fourth quarter financial results on Jan 29, before market opens.

Moving Forward

Conscious efforts to turn around are evident in the economy at large. The transportation sector is also riding on the upturn with palpable improvements in the fundamentals of airline and railroad stocks.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.

Get the full Report on LUV– FREE

Get the full Report on NSC – FREE

Get the full Report on CP – FREE

Follow us on Twitter:  http://twitter.com/ZacksResearch

Join us on Facebook:  http://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

SOURCE Zacks Investment Research, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
@DevOpsSummit at Cloud taking place June 6-8, 2017, at Javits Center, New York City, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long developm...
"LinearHub provides smart video conferencing, which is the Roundee service, and we archive all the video conferences and we also provide the transcript," stated Sunghyuk Kim, CEO of LinearHub, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
A look across the tech landscape at the disruptive technologies that are increasing in prominence and speculate as to which will be most impactful for communications – namely, AI and Cloud Computing. In his session at 20th Cloud Expo, Curtis Peterson, VP of Operations at RingCentral, will highlight the current challenges of these transformative technologies and share strategies for preparing your organization for these changes. This “view from the top” will outline the latest trends and developm...
When you focus on a journey from up-close, you look at your own technical and cultural history and how you changed it for the benefit of the customer. This was our starting point: too many integration issues, 13 SWP days and very long cycles. It was evident that in this fast-paced industry we could no longer afford this reality. We needed something that would take us beyond reducing the development lifecycles, CI and Agile methodologies. We made a fundamental difference, even changed our culture...
Things are changing so quickly in IoT that it would take a wizard to predict which ecosystem will gain the most traction. In order for IoT to reach its potential, smart devices must be able to work together. Today, there are a slew of interoperability standards being promoted by big names to make this happen: HomeKit, Brillo and Alljoyn. In his session at @ThingsExpo, Adam Justice, vice president and general manager of Grid Connect, will review what happens when smart devices don’t work togethe...
"There's a growing demand from users for things to be faster. When you think about all the transactions or interactions users will have with your product and everything that is between those transactions and interactions - what drives us at Catchpoint Systems is the idea to measure that and to analyze it," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York Ci...
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
@DevOpsSummit taking place June 6-8, 2017 at Javits Center, New York City, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @DevOpsSummit at Cloud Expo New York Call for Papers is now open.
In his General Session at 16th Cloud Expo, David Shacochis, host of The Hybrid IT Files podcast and Vice President at CenturyLink, investigated three key trends of the “gigabit economy" though the story of a Fortune 500 communications company in transformation. Narrating how multi-modal hybrid IT, service automation, and agile delivery all intersect, he will cover the role of storytelling and empathy in achieving strategic alignment between the enterprise and its information technology.
"Avere Systems is a hybrid cloud solution provider. We have customers that want to use cloud storage and we have customers that want to take advantage of cloud compute," explained Rebecca Thompson, VP of Marketing at Avere Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
SYS-CON Events announced today that Dataloop.IO, an innovator in cloud IT-monitoring whose products help organizations save time and money, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Dataloop.IO is an emerging software company on the cutting edge of major IT-infrastructure trends including cloud computing and microservices. The company, founded in the UK but now based in San Fran...
Discover top technologies and tools all under one roof at April 24–28, 2017, at the Westin San Diego in San Diego, CA. Explore the Mobile Dev + Test and IoT Dev + Test Expo and enjoy all of these unique opportunities: The latest solutions, technologies, and tools in mobile or IoT software development and testing. Meet one-on-one with representatives from some of today's most innovative organizations
SYS-CON Events announced today that Linux Academy, the foremost online Linux and cloud training platform and community, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Linux Academy was founded on the belief that providing high-quality, in-depth training should be available at an affordable price. Industry leaders in quality training, provided services, and student certification passes, its goal is to c...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.