Heartland Express (HTLD) Expected to Beat Earnings Estimates: Is It Worth Buying?

Wall Street is expecting a year-over-year decline in earnings on higher revenue when Heartland Express (HTLD) reports results for the quarter ended March 2023. While this widely known consensus outlook is important in assessing the company’s earnings picture, a significant factor that could impact the stock’s near-term price is how actual results compare to those estimates.

The stock could rise if these key numbers beat expectations in the upcoming earnings report. On the other hand, if they miss, the stock could fall.

While management’s discussion of business conditions on the earnings call will largely determine the durability of the immediate price change and future earnings expectations, it is worth having some insight into the likelihood of a positive EPS surprise.

Zacks Consensus Estimate

The trucking and logistics company is expected to report quarterly earnings of $0.19 per share in its upcoming report, which would represent a year-over-year change of -9.5%.

Revenue is expected to reach $305.47 million, up 101.9% from the same quarter last year.

Estimate revision trend

The consensus EPS estimate for the quarter has been revised 1.25% down to the current level over the last 30 days. This broadly reflects how analysts covering the data have collectively re-evaluated their initial estimates during this period.

Investors should note that the aggregate change does not necessarily reflect the direction of estimate revisions by each major analyst.

Whisper about earnings

Revisions to estimates prior to a company’s earnings release provide an indication of business conditions in the period in which the earnings are expected to be released. This insight is at the heart of our proprietary surprise prediction model, the Zacks Earnings ESP.

The Zacks Earnings ESP compares the Most Accurate Estimates to the Zacks Consensus Estimates for the quarter; The Most Accurate Estimate is a newer revision of the Zacks Consensus EPS Estimate. The idea is that analysts reviewing their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other consensus participants had previously predicted.

Thus, a positive or negative ESP reading theoretically indicates a likely deviation of actual earnings from consensus estimates. However, the model’s predictive power is only significant for positive ESP readings.

A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold). Our research shows that stocks with this combination deliver a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of the Earnings ESP.

Please note that a negative Earnings ESP reading does not indicate a missed profit. Our research shows that it is difficult to predict earnings beats with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Ranks of 4 (Sell) or 5 (Strong Sell).

How are the numbers shaping up for Heartland Express?

In the case of Heartland Express, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become optimistic about the company’s earnings prospects. This results in an Earnings ESP of +1.78%.

On the other hand, the company’s stock currently has a Zacks Rank #3.

Therefore, this combination indicates that Heartland Express will most likely beat consensus EPS estimates.

Does the history of surprising results have any clue?

When calculating a company’s future earnings estimates, analysts often consider how well it matched previous consensus estimates. So it’s worth looking at a surprising story to assess its impact on the upcoming numbers.

For the last reported quarter, Heartland Express was expected to post earnings of $0.29 per share when in fact it produced earnings of $0.20, delivering a surprise of -31.03%.

The company has topped consensus earnings per share estimates twice over the last four quarters.

Bottom line

Earnings improvement or lack thereof may not be the sole basis for a stock’s rise or fall. Many stocks lose value despite good earnings because of other factors that disappoint investors. Similarly, unforeseen catalysts help many stocks gain despite earnings losses.

That said, betting on stocks that are expected to beat earnings expectations increases the odds of success. That’s why it’s worth checking a company’s Earnings ESP and Zacks Rank ahead of its quarterly earnings release. Be sure to use our Earnings ESP Filter to discover the best stocks to buy or sell before they release.

Heartland Express appears to be a compelling candidate for improved financial performance. However, investors should pay attention to other factors when betting on these stocks or staying away from them ahead of the earnings release.

Expected results of an industry player

Among stocks in the Zacks Transportation – Truck industry, JB Hunt (JBHT) is soon expected to post earnings of $2.10 per share for the quarter ending March 2023. This estimate indicates a year-over-year change of -8.3% . Revenue for the quarter is expected to be $3.49 billion, up 0.1% from the year-ago quarter.

The consensus EPS estimate for JB Hunt has been revised 0.6% higher in the past 30 days to current levels. However, the lower Most Accurate Estimate results in an Earnings ESP of -2.60%.

This earnings ESP, combined with the Zacks Rank #3 (Hold), makes it difficult to confidently predict that JB Hunt will surpass the consensus EPS estimate. The company has topped consensus EPS estimates three times over the last four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Heartland Express, Inc. (HTLD): Free Stock Analysis Report

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