The transportation industry is witnessing remarkable growth, propelled by the adoption of advanced technologies, a heightened reliance on e-commerce, and supportive government initiatives.
Consequently, investors may consider increasing their stakes in AerCap Holdings N.V. (AER), Matson, Inc. (MATX), and ArcBest Corporation (ARCB), all of which are well-positioned to capitalize on these emerging industry trends.
The demand for faster shipping options is on the rise, with businesses increasingly embracing same-day and on-demand shipping solutions. The popularity of e-commerce, driven by numerous online shopping platforms catering to growing consumer needs, is propelling a boom in the transportation industry and reshaping logistics operations.
Moreover, Artificial Intelligence (AI) is playing a transformative role in the shipping and logistics market. The Gitnux Market Data Report 2024 estimates that the AI market in shipping and logistics will reach $12.87 billion by 2026. The surge in AI adoption is facilitating the industry’s push toward more innovative and efficient operational practices.
Additionally, ongoing government initiatives aimed at improving infrastructure are likely to promote greater supply chain efficiency, ultimately reducing costs and benefiting the market as a whole. That being said, the U.S. transportation and logistics industry is anticipated to grow by 2.7% in 2024.
Furthermore, as per a report published by Mordor Intelligence, the global e-commerce market, estimated at $8.80 trillion in 2024, is expected to reach $8.81 trillion by 2029, growing at a CAGR of 15.8%. This growth presents significant opportunities for the transportation sector to expand its services and capabilities.
Considering these favorable trends, let’s take a closer look at the fundamentals of the three transportation stocks, starting with #3.
Stock #3: AerCap Holdings N.V. (AER)
Based in Dublin, Ireland, AER offers a range of lease assets, including aircraft, engines, helicopters, and more. With a portfolio of approximately 1,717 aircraft, 1000 engines, and 300 helicopters, the company serves approximately 300 customers worldwide, offering comprehensive fleet solutions and aftermarket components, equipment, and services.
On August 1, AER announced the delivery of three Airbus A321neo aircraft on a long-term lease to AirAsia Group as part of a fifteen-aircraft deal. The rest of the twelve aircraft are to be delivered in 2024 and 2025.
With a 30-year-long partnership with AirAsia, AER is to benefit from the long-term business deal. The collaboration could secure sustained business for AER, ensuring the company’s steady expansion in the competitive aviation leasing industry.
On July 9, AER announced a lease agreement with Turkish Airlines for the lease of ten Airbus A321neo aircraft. By supporting Turkish Airlines’ fleet modernization, AER could enhance its international partnerships and strengthen its global market position, boosting its brand visibility and business potential worldwide.
For the fiscal 2024 second quarter that ended June 30, AER’s total revenues and other income increased 1.8% year-over-year to $1.96 billion. Its net income attributable to AER came in at $448.17 million. Moreover, the company’s EPS came in at $2.28, representing an increase of 7.5% from the previous year’s quarter.
Analysts predict AER’s revenue for the fiscal year ending December 2024 to increase 3.7% year-over-year to $7.86 billion. The company’s EPS for the current year is also estimated to rise 3.2% from the prior year to $11.07 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters.
AER’s stock has surged 30.1% over the past nine months and 54.6% over the past year to close the last trading session at $96.62.
AER’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AER has an A grade for Sentiment and a B for Momentum and Quality. Within the Air Freight & Shipping Services industry, it is ranked #2 out of 16 stocks.
Beyond what we stated above, we also have given AER grades for Growth, Value, and Stability. Get all AER ratings here.
Stock #2: Matson, Inc. (MATX)
MATX specializes in ocean transportation and logistics. Its Ocean Transportation segment delivers freight services to domestic non-contiguous economies. The Logistics segment offers services like multimodal transportation brokerage, supply chain management, and non-vessel operating common carrier freight forwarding.
MATX’s total operating revenue for the fiscal 2024 second quarter ended June 30, 2024, increased 9.6% year-over-year to $847.40 million. Its operating income rose 28.9% over the year-ago value to $124.60 million. Also, the company’s net income and EPS rose 40.1% and 46.5% from the prior year’s period to $113.20 million and $3.31, respectively.
MATX anticipates significantly higher operating income for Ocean Transportation in the third quarter of 2024, surpassing the $118.2 million achieved in the same period last year. For the fourth quarter of 2024, the company projects a moderate increase in operating income compared to the $66.4 million recorded in 2023.
Additionally, MATX expects its consolidated operating income for the third quarter of 2024 to be significantly higher than the $132.1 million earned in the third quarter of 2023 and for the fourth quarter of 2024 to also be higher than the $75.3 million achieved in the fourth quarter of 2023.
For the fiscal third quarter (ending in September 2024), MATX’s revenue and EPS are expected to grow 16.9% and 37.2% year-over-year to $967.68 million and $4.66, respectively. Moreover, the company topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of MATX have gained 23.9% over the past nine months and 58.3% over the past year to close the trading session at $138.54.
MATX’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system.
MATX has a B grade for Value, Sentiment, Momentum, and Quality. The stock is ranked #4 out of 37 stocks in the A-rated Shipping industry.
To access additional grades of MATX for Growth and Stability ratings, click here.
Stock #1: ArcBest Corporation (ARCB)
ARCB, a logistics powerhouse, employs technology and comprehensive solutions to fulfill its clients' supply chain requirements. It operates in two segments: Asset-Based, offering less-than-truckload services; and Asset-Light, encompassing ground expedited services, truckload brokerage, household goods moving, and managed transportation solutions.
On August 6, ARCB announced a partnership with TriumphPay, a premier payments network for freight brokers, factors, shippers, and carriers. By becoming a full audit and payments network participant, ARCB is expected to benefit from faster and more secure payment processes, enhancing its appeal as a preferred partner for carriers and driving significant growth opportunities.
On March 18, ARCB announced a collaboration with NVIDIA Corporation (NVDA), integrating the NVIDIA Isaac Perceptor platform into its material-handling processes. By employing cutting-edge machine vision technology, the partnership will enhance safety and efficiency across warehouses, distribution centers, and manufacturing facilities.
This advancement positions ARCB to better meet the growing market demands, ultimately leading to increased efficiency, reduced operational costs, and improved competitiveness within the logistics industry.
For the fiscal 2024 second quarter that ended June 30, ARCB reported revenues of $1.08 billion. Its non-GAAP operating income from continuing operations rose 28.1% from the year-ago value to $64.20 million. Furthermore, the company’s adjusted EBITDA from continuing operations increased 24.3% from the prior year's period to $94.86 million.
Also, the company’s non-GAAP net income and non-GAAP EPS from continuing operations came in at $47.38 million and $1.98, up 24.8% and 28.6% year-over-year, respectively.
The consensus revenue and EPS estimates of $4.56 billion and $9.78 for the fiscal year ending December 2025 reflect a rise of 6.2% and 37.8% year-over-year, respectively. Moreover, the company topped the consensus revenue estimates in all four trailing quarters.
ARCB’s stock has surged 4.3% over the past three months and 10.6% over the past year to close the last trading session at $110.93.
ARCB’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
ARCB has a B grade for Growth, Momentum, and Value. It has topped the 17-stock Trucking Freight industry.
To access ARCB's Stability, Sentiment, and Quality ratings, click here.
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AER shares were unchanged in premarket trading Tuesday. Year-to-date, AER has gained 30.71%, versus a 20.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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