At the peak of the first-quarter 2016 earnings season, we see quite an uninspiring earnings picture. Our analysis has shown that year-over-year growth for Q1 earnings as well as revenues have ventured into negative territories for S&P 500 companies (data considered till Apr 27). Mirroring these fears, earnings growth is expected to be negative for 9 of the 16 Zacks Sectors with the Energy sector likely to face the worst, courtesy the dismal oil show. However, cheap oil has been nothing short of a godsend for transportation companies as fuel accounts for a large chunk of their expenses. No wonder earnings growth is likely to be positive for the transportation sector – comprising airline companies, truckers, shippers and railroads to name a few – in the first quarter earnings season. String of Earnings Beats for Airline Stocks Airline companies have been the biggest gainers from the cheap oil scenario. As has been the case in the past few quarters, the first quarter of 2016 has seen significant bottom-line expansion for carriers, thanks to the continuing slump in oil prices. Moreover, key players in the space like United Continental Holdings (UAL), American Airlines Group (AAL) and Delta Air Lines (DAL) have managed to beat the Zacks Consensus Estimate, which has been pretty conservative owing to multiple downward estimate revisions made over the past few months. Oil prices, which have been soft for well over 18 months now, have been instrumental in helping airline companies’ rake in huge profits. Apart from the stellar earnings performances, there has been a surge in profit sharing activities, buybacks, and dividend payouts in the airline space, largely because of the newfound strength in financials. All of these bullish factors have helped the “Trans-Airline” segment boast a healthy Zacks Industry Rank (54), placing it at the top 1/3rd of the 260+ member industry group and indicating the group’s near-term Positive outlook. With railroads continuing to struggle mainly due to a decline in coal shipments, we turn to the other sectors in the transportation space for potential winners. Shipping stocks can be considered as valuable candidates on this front as they too have benefitted immensely from the weak oil scenario. Making the Right Pick Given the highly diversified nature of the transportation space, arriving at stocks likely to outperform on the earnings front is no mean feat. To simplify the search procedure, we have utilized our proprietary methodology which advises investors to screen stocks that have a combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising in their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that for stocks with the above-mentioned combination, the chance of a positive earnings surprise is as high as 70%. An earnings beat more often than not boosts investor confidence in the stocks, which translates into rapid price appreciation. Our Choices Consistent with the tone of the write-up, our list of potential outperformers in the first quarter comprise of airline players and shipping companies. Skywest Inc. (SKYW), headquartered at St. George, UT, operates one of the larger regional airlines in the U.S. The carrier is also likely to beat the Zacks Consensus Estimate in the first quarter of 2016, with results scheduled to be revealed on Apr 28. Skywest’s first-quarter earnings ESP of +16.00% and Zacks Rank #2 make it our first choice. Copa Holdings SA (CPA), based in Panama City, Panama, is a provider of airline passenger and cargo services in Latin America. This Zacks Rank #3 stock currently has an earnings ESP of +8.70%. The Zacks Consensus Estimate for first-quarter 2016 earnings is pegged at $1.38. The company is expected to report its first-quarter results on May 5. Our next choice is Frontline Ltd. (FRO), a provider of seaborne transportation of crude oil and oil products based in Hamilton, Bermuda. This Zacks Rank #3 stock currently has an earnings ESP of +11.54%. The Zacks Consensus Estimate for first-quarter 2016 earnings currently stands at 26 cents. The company is expected to report first-quarter results on Jun 3. We round off the list by including Ship Finance International Limited (SFL). The Hamilton, Bermuda-based shipping company boasts one of the largest fleet in the world and most of the vessels are employed on medium- or long-term charters. This Zacks Rank #3 stock currently has an earnings ESP of +1.67%. The Zacks Consensus Estimate for first-quarter 2016 earnings currently stands at 60 cents. The company is expected to report first-quarter results on Jun 3. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SKYWEST INC (SKYW): Free Stock Analysis Report COPA HLDGS SA-A (CPA): Free Stock Analysis Report FRONTLINE LTD (FRO): Free Stock Analysis Report SHIP FIN INTL (SFL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research