3 Transport-Service Stocks to Keep an Eye on Despite Industry Hiccups

Industry Overview - The Zacks Transportation-Services industry is experiencing challenges due to inflation-induced elevated interest rates, weak freight rates, and ongoing supply-chain disruptions [1] - Companies in this industry provide logistics, leasing, and maintenance services, focusing on global logistics management and third-party logistics solutions [2] - The industry's performance is closely tied to the overall economy, with improvements in manufactured and retail goods positively impacting participants [2] Current Trends - Supply-chain disruptions and weak freight rates continue to negatively affect the industry, with the Cass Freight Shipment Index declining 5.2% year over year in September, marking a downward trend for nine consecutive months [3] - Companies are focusing on cost-cutting measures and improving productivity to address high expenses and weaker demand scenarios [5] Financial Performance - Companies are returning cash to shareholders through dividends and buybacks, indicating financial strength; Expeditors announced a 5.8% increase in its quarterly dividend, while Matson also increased its dividend [4] - The Zacks Transportation-Services industry has underperformed the S&P 500 and the broader Transportation sector, gaining only 3.4% over the past year compared to the S&P 500's 31.1% and the sector's 11.3% [9] Valuation Metrics - The industry is currently trading at a forward price-to-sales ratio of 2.18X, lower than the S&P 500's 5.04X but higher than the sector's trailing 12-month P/S of 1.82X [10] Earnings Outlook - The Zacks Industry Rank for the Transportation-Services industry is 191, placing it in the bottom 24% of over 250 Zacks industries, indicating a negative earnings outlook [6][8] - Analysts have decreased the industry's 2025 earnings estimates by 22.3% from 2024 estimates, reflecting a loss of confidence in earnings growth potential [8] Notable Stocks - Matson, with a Zacks Rank 1 (Strong Buy), has seen a 7.6% increase in the consensus estimate for 2025 earnings over the past 60 days and has gained 74.5% in the past year [13] - Expeditors, ranked 2 (Buy), has a positive liquidity position and has seen a 0.6% increase in the consensus estimate for 2024 earnings [16] - C.H. Robinson, ranked 3 (Hold), has also seen a 2.6% increase in the consensus estimate for 2025 earnings and has gained 28% in the past year [18]