The majority of players in the widely diversified Zacks Transportation sector have already released fourth-quarter 2024 results. The percentage of companies beating earnings estimates is impressive so far. 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Among transportation companies that are yet to report fourth-quarter numbers, we expect the likes of Air Canada ACDVF, Controladora Vuela Compañía de Aviación, S.A.B. de C.V. VLRS, popularly known as Volaris, and Golar LNG GLNG to report better-than-expected earnings despite weak freight demand, supply-chain woes and inflation-induced economic uncertainty.

A Look at the Major Q4 Tailwinds for Transportation Stocks 

Upbeat passenger volumes during the holiday season have been a huge positive, aiding the top-line performance of the airline companies in the space.

While air travel demand has remained strong on the leisure front, the fact that travel demand on the international front is upbeat has also helped. For example, Chicago-based United Airlines’ UAL transatlantic bookings for 2024 winter were 30% higher than pre-COVID levels.

The solid growth in unit revenues is backed by consistent travel demand and benefits from the successful execution of tactical actions (which includes improving network optimization and capacity rationalization). The sharp reduction in airline seats in the U.S. market, which has driven up ticket prices, has boosted the top-line performance of carriers in the final quarter of 2024.

The fourth-quarter performance of transportation stocks has also been aided by prudent cost-management actions. To mitigate the ills associated with lackluster freight demand, many companies in the sector are cutting costs. Moreover, the fact that e-commerce is still a force to reckon with bodes well.

Here’s How to Pick the Right Stocks

Quite a few transportation stocks are likely to report earnings shortly. It is always a daunting task for investors to pick a winning basket of stocks with the potential to deliver better-than-expected earnings.

While there is no foolproof method of choosing outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks with high chances of delivering a positive surprise in their upcoming earnings announcement. Our research shows that for stocks with this perfect mix of elements, the odds of an earnings beat are as high as 70%.

Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Our Choices

Air Canada has been benefiting from the buoyant scenario with respect to air travel demand. Upbeat passenger volumes are likely to have aided the company’s fourth-quarter performance. ACDVF currently has an Earnings ESP of +79.46% and a Zacks Rank of 3. ACDVF is slated to report fourth-quarter 2024 results on Feb. 14.

ACDVF beat the Zacks Consensus Estimate in two of the last three quarters, missing the mark once. The average miss is 340.4%.

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Volaris, based in Mexico, currently has an Earnings ESP of +4.27% and carries a Zacks Rank #3. Upbeat air travel demand is aiding the company. VLRS is slated to report fourth-quarter 2024 results on Feb. 24.

Despite capacity reduction due to engine inspections, the Mexican airline expects total revenues for 2024 to be close to 2023. The top line is likely to have been aided by an increase in base fares and ancillary revenue per passenger.

Demand is likely to have increased, with management stating that booking trends for the peak holiday season were robust.  VLRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average being 159.5%.

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Golar LNG, a shipping company, currently has an Earnings ESP of +11.58% and sports a Zacks Rank #1. GLNG is slated to report fourth-quarter 2024 results on Feb. 27.

The company’s performance in the to-be-reported quarter is likely to have been aided by the growing demand for floating LNG or liquefied natural gas. GLNG ranks first in terms of FLNG capacity. The FLNG market has been growing due to its economic viability and is expected to have witnessed significant capacity growth, particularly in Africa and North America. GLNG beat the Zacks Consensus Estimate in three of the last four quarters and missed the mark in the other quarter. The average beat is 30.2%.

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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report

Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (VLRS) : Free Stock Analysis Report

Golar LNG Limited (GLNG) : Free Stock Analysis Report

Air Canada (ACDVF) : Free Stock Analysis Report

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