Strong Q4 Earnings Lift Transport ETFs Higher

The transportation sector has been on a smooth ride this earnings season with stock prices rising 3.1% (aggregate one-day stock market reaction to earnings releases) in response to earnings announcements. Total earnings of 97.7% of the sector’s total market capitalization that has been reported so far is up 29.5% on revenue growth of 7%. Earnings growth is much better than 24.3% reported in Q3 while revenue growth is lower than Q3’s 9.6%.

Earnings and revenue beat ratios of 76.9% and 69.2%, respectively, are encouraging as most of the industry players managed to beat the Zacks Consensus Estimate for earnings or revenues or both.

For a better understanding, let’s dig into the earnings results of some well-known industry players:

Transportation Earnings in Focus

The world's largest package delivery company United Parcel Service (UPS - Free Report) beat the Zacks Consensus Estimate for earnings while lagged on revenues. Earnings of $1.94 were 3 cents ahead of the estimate while revenues of $19.85 billion fell short of the estimated $19.92 billion. For 2019, the company expects earnings per share in the range of $7.45-$7.75. The Zacks Consensus Estimate at the time of earnings release was pegged at $7.76.

Major railroads Norfolk Southern Corp (NSC - Free Report) and Union Pacific (UNP - Free Report) topped both the estimates. Norfolk Southern outpaced earnings estimates by 27 cents, while earnings at Union Pacific beat the estimate by 6 cents. Revenues trumped the Zacks Consensus Estimate by $51 million and $26 million, respectively. Meanwhile, earnings of $1.56 at Kansas City Southern (KSU - Free Report) met the Zacks Consensus Estimate and revenues of $694 million marginally beat the consensus estimate by $2 million.

U.S. airlines Delta Air Lines (DAL - Free Report) and United Continental (UAL - Free Report) beat earnings estimates while the former lagged on revenues. Earnings at Delta edged past the Zacks Consensus Estimate by 3 cents while revenues came $87 million below the estimate. At United Continental, earnings of $2.14 and revenues of $10.49 billion edged past the Zacks Consensus Estimate of $1.86 and $10.37 billion, respectively. For 2019, Delta expects earnings per share of $6-$7. The Zacks Consensus Estimate was pegged at $6.53 per share at the time of earnings release. United Continental expects 2019 earnings per share of $10-$12. The Zacks Consensus Estimate at the time of earnings release was at $10.65 per share.

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