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UPS to Report Q3 Earnings: What's in Store for the Stock?

Zacks Equity Research
·4 min read

United Parcel Service UPS is scheduled to report third-quarter 2020 earnings on Oct 28, before market open.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been revised 4.6% upward over the past 60 days. Moreover, the company has a decent earnings history. Its bottom line outperformed the Zacks Consensus Estimate in three of the last four quarters and lagged the same in the remaining quarter.

United Parcel Service, Inc. Price and EPS Surprise

United Parcel Service, Inc. Price and EPS Surprise
United Parcel Service, Inc. Price and EPS Surprise

United Parcel Service, Inc. price-eps-surprise | United Parcel Service, Inc. Quote

Given this backdrop, let’s delve into the factors that might have impacted the company’s performance in the September quarter.

We expect the surge in e-commerce demand amid the current pandemic situation to boost UPS’ third-quarter results. The impending release is likely to reflect the significant increase in home deliveries amid the ongoing coronavirus outbreak. The buoyancy in residential and healthcare shipments is likely to have driven the company’s performance in the to-be-reported quarter. Solid demand for residential delivery is likely to have aided business-to-consumer shipments in the September quarter.

Higher demand for residential delivery is expected to have contributed to the performance of the U.S. Domestic Package segment, which accounts for bulk of the top line. The Zacks Consensus Estimate for segmental revenues is currently pegged at $13,063 million, indicating a 14% improvement from the number reported in third-quarter 2019.

The Zacks Consensus Estimate for revenues at the International Package division currently stands at $3,619 million, suggesting a 3.6% rise from the figure reported in third-quarter 2019. Segmental performance is likely to have been supported by strong outbound demand from Asia and an upbeat cross-border e-commerce in Europe.

However, adjusted overall profit at UPS might have been dented by coronavirus-induced supply-chain disruptions.

Earnings Whispers

The proven Zacks model predicts an earnings beat for UPS this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: UPS has an Earnings ESP of +4.52% as the Most Accurate Estimate is higher than the Zacks Consensus Estimate of $1.82 by 8 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: UPS carries a Zacks Rank #2, currently.

Highlights of Q2 Earnings

UPS’ earnings (excluding 10 cents from non-recurring items) per share of $2.13 surpassed the Zacks Consensus Estimate of $1.04. The bottom line also improved 8.7% year over year. UPS generated revenues worth $20,459 million in the quarter, outperforming the Zacks Consensus Estimate of $17,344.4 million. Moreover, the top line improved 13.4% on a year-over-year basis.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also check out a few other stocks worth considering like Westinghouse Air Brake Technologies Corporation WAB, Werner Enterprises WERN and Schneider National SNDR as these too possess the perfect combination of elements to beat estimates this earnings season.

Westinghouse Air Brake Technologies Corporation has an Earnings ESP of +2.78% and a Zacks Rank of 1, presently. The company will release third-quarter 2020 results on Oct 28.

Werner Enterprises has an Earnings ESP of +1.29% and a Zacks Rank #3, presently. The company will release third-quarter 2020 results on Oct 29.

Schneider National has an Earnings ESP of +1.82% and a Zacks Rank of 2, presently. The company will release third-quarter 2020 results on Oct 29

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United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
 
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
 
Werner Enterprises, Inc. (WERN) : Free Stock Analysis Report
 
Schneider National, Inc. (SNDR) : Free Stock Analysis Report
 
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