Baird reports explain that transportation indicators are first to bottom before macro data and the broader market dips. Digging deeper, Dow Transports bottoms 1-2 quarters before the cyclical low in manufacturing PMI.
However, leading PMI indicators suggest manufacturing PMI levels may not bottom until H2 2023.
Trough PMI levels point towards a sharper economic downturn and transport EPS declines ~20% during prior U.S. recessions.
Historically transports have experienced trough EBIT declines of +20% vs. the current consensus decline of ~4% expected for 2023.
Stocks on radar: C.H. Robinson Worldwide (CHRW); CSX (CSX); Expeditors International of Washington (EXPD); FedEx (FDX); Forward Air (FWRD); Heartland Express (HTLD); Hub Group (HUBG); J. B. Hunt Transport Services (JBHT); Knight-Swift Transportation (KNX); Landstar System (LSTR); Norfolk Southern (NSC); Old Dominion Freight Line (ODFL); Ryder System (R); Schneider National (SNDR); Union Pacific (UNP); United Parcel Service (UPS); Werner Enterprises (WERN)
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