Leading passenger and cargo carrier, Union Pacific Corporation UNP is slated to release its first-quarter 2015 financial numbers before the market opens on Apr 23, 2015.
Last quarter, Union Pacific had delivered a 6.62% positive earnings surprise. In the last four quarters, the company’s earnings have outpaced the Zacks Consensus Estimate in three of the past four quarters while meeting the mark in one. This leads to an average beat of 2.16%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Notably, the positive outlook provided by the carrier is encouraging. Union Pacific expects 2015 revenues to grow on the back of an improving U.S. economy that should drive growth at many of the company’s businesses. Moreover, the company also anticipates growth in the housing construction market and auto sales, going forward. The company believes that if economic growth remains stable, it could witness solid core pricing gains.
We are also positive on the company’s revenue and volume growth from the automotive division. Finished vehicles and auto parts shipments should continue to benefit from strength in production and sales. In addition, low inventory levels should also drive demand for coal in 2015.
However, the ongoing labor problems on the West Coast ports can potentially cause huge losses, impacting the stock adversely. To add to the woes, high capital expenditure and heightened competition may further dent the company’s profitability in the coming quarters.
Earnings Whispers
Our proven model does not conclusively show that Union Pacific is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Union Pacific’s earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at $1.37.
Zacks Rank: Union Pacific carries a Zacks Rank #3 that increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
Note that stocks with Zacks Rank #4 and 5 (Sell-rated stocks) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ryder System, Inc. R has an earnings ESP of +1.98% and a Zacks Rank #2.
Virgin America Inc. VA has an earnings ESP of +7.14% and carries a Zacks Rank #3.
United Continental Holdings, Inc. UAL has an earnings ESP of +3.55% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment