UNP - Eyes on travel and transports in the earnings calendar ahead

2023-04-14 15:05:43 ET

The travel and transportation sectors are in for a slew of key updates in the earnings week ahead.

In terms of travel demand, upcoming reports from major airlines will be front and center with data trickling through as the week progresses. American Airlines ( AAL ) is set to report earnings on Wednesday, following United Airlines ( NASDAQ: UAL ) on Tuesday and ahead of Alaska Airlines ( ALK ) on Thursday.

Just a week prior to the slate of reports, American Airlines ( AAL ) offered somewhat light profit guidance , pushing the entire sector lower ahead of their quarterly updates.

Despite the recent drop, the US Global Jets ETF ( JETS ) tracking the sector is up modestly year to date. The sector also edged higher following an optimistic outlook from Delta Air Lines ( DAL ), even as Delta stock itself wavered. Key concerns ahead of the reports concern the resilience of travel demand amid macroeconomic uncertainty and the impact of increased fuel costs given global supply shifts .

Turning to the rail industry, Union Pacific ( UNP ) and CSX Corporation ( CSX ) are expected to post quarterly results on Thursday, kicking off the earnings season ahead of their Canadian competitors and Norfolk Southern ( NSC ) in the following week.

The rail sector has slumped since February as a laser focus on derailments and operational issues has hit the industry and provoked negative sentiment . For example, a negative catalyst watch was opened by JP Morgan on Union Pacific ahead of its quarterly print.

That said, both Union Pacific ( UNP ) and CSX ( CSX ) have been able to ink labor agreements with major unions and have been selected as contrarian picks by analysts. For example, Barclays told clients to keep an eye on opportunities in rails amid persistent pessimism while Morgan Stanley upgraded CSX Corp. ( CSX ) to Neutral as the recent pullback has balanced the risk/reward dynamic .

Other reports impacting the transport industry in the week ahead include JB Hunt ( JBHT ) and Knight-Swift Transportation Holdings ( KNX ). The latter’s report comes shortly after its acquisition of US Xpress .

Dig into the earnings slate for the week ahead .

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