ZACKS·2025-10-22 18:41Industry Overview - The Zacks Transportation sector is facing challenges due to increased expenses, inflation-driven high interest rates, a decline in freight demand, and supply-chain issues [1][2] - Geopolitical uncertainties and tariff-related economic tensions are negatively impacting consumer sentiment and growth expectations [1] Economic Factors - Inflation concerns and risks of an economic slowdown are likely to increase market volatility [2] - Supply-chain disruptions are expected to keep costs elevated in the near future [2] Oil Prices Impact - A decrease in oil prices by 4.2% during the July-September 2025 period is anticipated to positively affect the profitability of transportation companies, as fuel costs are a major expense [3] Company Earnings Expectations - Investors are awaiting earnings results from Southwest Airlines Co. (LUV), Union Pacific Corporation (UNP), American Airlines Group Inc. (AAL), and Norfolk Southern Corporation (NSC), all scheduled for release this week [4] Southwest Airlines (LUV) - LUV is expected to report a 1.3% increase in passenger revenues compared to the third quarter of 2024 [6] - The Zacks Consensus Estimate for LUV's third-quarter 2025 revenues is $6.97 billion, reflecting a 1.44% year-over-year growth [7] - LUV's earnings estimate has been revised upward by over 100% in the past 60 days to 1 cent per share, but this represents a 93.33% decline from the previous year's actual [7][8] Union Pacific Corporation (UNP) - The Zacks Consensus Estimate for UNP's third-quarter 2025 revenues is $6.23 billion, indicating a 2.34% increase year-over-year [9] - Freight revenues are estimated at $5.86 billion, a 1.7% increase from the previous year, while other revenues are expected to decline by 3.6% [9] - The earnings estimate for UNP is $2.99 per share, reflecting an 8.73% increase from the year-ago actual [10][11] American Airlines Group Inc. (AAL) - AAL's loss estimate for the third quarter has widened to 27 cents per share, compared to a profit of 30 cents in the same quarter last year [12] - The Zacks Consensus Estimate for AAL's revenues is $13.63 billion, indicating a slight decline of 0.13% year-over-year [13] - AAL's earnings prediction does not suggest a likely earnings beat, with an Earnings ESP of -0.68% and a Zacks Rank of 3 [14] Norfolk Southern Corporation (NSC) - The earnings estimate for NSC has been revised downward by 4.50% to $3.18 per share, indicating a 2.15% decline from the previous year [15] - The revenue estimate for NSC is $3.09 billion, reflecting a 1.26% year-over-year growth [15] - E-commerce demand is expected to support shipment volumes, but challenges such as inflation, high interest rates, and weak freight demand may negatively impact performance [16][17]