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
"We are an IT services solution provider and we sell software to support those solutions. Our focus and key areas are around security, enterprise monitoring, and continuous delivery optimization," noted John Balsavage, President of A&I Solutions, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
There is a huge demand for responsive, real-time mobile and web experiences, but current architectural patterns do not easily accommodate applications that respond to events in real time. Common solutions using message queues or HTTP long-polling quickly lead to resiliency, scalability and development velocity challenges. In his session at 21st Cloud Expo, Ryland Degnan, a Senior Software Engineer on the Netflix Edge Platform team, will discuss how by leveraging a reactive stream-based protocol,...
SYS-CON Events announced today that Calligo, an innovative cloud service provider offering mid-sized companies the highest levels of data privacy and security, has been named "Bronze Sponsor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Calligo offers unparalleled application performance guarantees, commercial flexibility and a personalised support service from its globally located cloud plat...
As enterprise cloud becomes the norm, businesses and government programs must address compounded regulatory compliance related to data privacy and information protection. The most recent, Controlled Unclassified Information and the EU’s GDPR have board level implications and companies still struggle with demonstrating due diligence. Developers and DevOps leaders, as part of the pre-planning process and the associated supply chain, could benefit from updating their code libraries and design by in...
"Peak 10 is a hybrid infrastructure provider across the nation. We are in the thick of things when it comes to hybrid IT," explained Michael Fuhrman, Chief Technology Officer at Peak 10, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We were founded in 2003 and the way we were founded was about good backup and good disaster recovery for our clients, and for the last 20 years we've been pretty consistent with that," noted Marc Malafronte, Territory Manager at StorageCraft, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
DevOps at Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st 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 w...
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
"We are focused on SAP running in the clouds, to make this super easy because we believe in the tremendous value of those powerful worlds - SAP and the cloud," explained Frank Stienhans, CTO of Ocean9, Inc., in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"The Striim platform is a full end-to-end streaming integration and analytics platform that is middleware that covers a lot of different use cases," explained Steve Wilkes, Founder and CTO at Striim, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We are still a relatively small software house and we are focusing on certain industries like FinTech, med tech, energy and utilities. We help our customers with their digital transformation," noted Piotr Stawinski, Founder and CEO of EARP Integration, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"At the keynote this morning we spoke about the value proposition of Nutanix, of having a DevOps culture and a mindset, and the business outcomes of achieving agility and scale, which everybody here is trying to accomplish," noted Mark Lavi, DevOps Solution Architect at Nutanix, in this SYS-CON.tv interview at @DevOpsSummit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"DivvyCloud as a company set out to help customers automate solutions to the most common cloud problems," noted Jeremy Snyder, VP of Business Development at DivvyCloud, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
DX World EXPO, LLC., a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
21st International Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, 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. Me...