3 Transport-Service Stocks to Keep an Eye on Amid Industry Headwinds

Industry Overview - The Zacks Transportation-Services industry is currently facing challenges such as weak freight rates, high inflation, and ongoing supply-chain disruptions [1][3][4] - Tariff-related uncertainty is another significant challenge impacting the industry [1][5] - Companies like Expeditors International of Washington, C.H. Robinson Worldwide, and Matson are noted for their ability to navigate these challenges [1] Economic Impact - The health of companies in the Zacks Transportation-Services industry is directly linked to the overall economy, with improvements in manufactured and retail goods positively affecting industry participants [2] - The Cass Freight Shipments Index has declined by 5.3% year over year in March, indicating weak freight demand [3] Cost Management - Industry players are focusing on cost-cutting measures to improve productivity and efficiency in response to high inflation and weaker demand [4] - Significant inflation levels are affecting labor, freight, and fuel costs [4] Tariff and Trade Issues - The current U.S. administration's protectionist policies are leading to increased tariffs, particularly affecting major trading partners like Canada, Mexico, and China [5] - The ongoing trade tensions are expected to result in increased volatility and uncertainty for the industry [5] Industry Performance - The Zacks Transportation-Services industry ranks 195 out of 250 Zacks industries, placing it in the bottom 21% [6][7] - The industry's earnings estimate for 2025 has decreased by 21.6% since August 2024, indicating a negative earnings outlook [8] Stock Market Performance - The industry has underperformed the S&P 500, declining by 14.5% over the past year compared to the S&P 500's appreciation of 9.9% [11] - The industry is currently trading at a forward price-to-sales ratio of 1.46X, compared to the S&P 500's 4.92X [13] Company Highlights - Expeditors International of Washington (EXPD): Currently holds a Zacks Rank 3 (Hold), has beaten earnings estimates in three of the last four quarters with an average beat of 11.6% [17] - C.H. Robinson Worldwide (CHRW): Also holds a Zacks Rank 3, has surpassed earnings estimates in each of the past four quarters with an average beat of 14.5% [21] - Matson (MATX): Carries a Zacks Rank 3, has a trailing four-quarter earnings surprise of 12.7% on average [24]