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United Parcel Service (UPS) Q4 Earnings: What's in Store?

United Parcel ServiceUPS is scheduled to report fourth-quarter 2016 results on Jan 31, before the market opens.

In the third quarter, the company reported a positive earnings surprise of 0.7%. Earnings increased 3.6% year over year. Revenues improved 4.9% to $14.9 billion year over year and also beat the Zacks Consensus Estimate of $14.7 billion. Let's see what awaits the company in the fourth quarter.

Factors Likely to Influence this Quarter

We expect adverse foreign currency movements to impact results in the fourth quarter as well. Also, the lower fuel charges are expected to limit earnings growth.

We believe that the main focus in the fourth quarter will be on updates regarding the company's performance during the holiday season. United Parcel, like its rival FedEx Corporation FDX , had left no stone unturned to ensure a successful holiday season. In a bid to increase capacity, efficiency and flexibility, United Parcel installed temporary processing facilities and operational technology. The Atlanta-based company had also hired around 95,000 seasonal workers to meet the surge in demand during the period.

Apart from its efforts to perform well during the holiday season, we are also impressed by the company's efforts to expand. In keeping with its expansion efforts, United Parcel completed the acquisition of Marken, a provider of supply chain solutions to the life sciences industry, in the fourth quarter. During the quarter, United Parcel entered into a strategic alliance with Optoro, which helps to better manage returns and inventory for manufacturers and retailers by using advanced technology tools. We are also impressed by the company's efforts to reward shareholders consistently through buybacks and dividends.

United Parcel Service, Inc. Price and EPS Surprise

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

Earnings Whispers

Our proven model does not conclusively show that United Parcel is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for United Parcel is 0.00%, as the Most Accurate estimate is in line with the Zacks Consensus Estimate of $1.68 per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: United Parcel carries a Zacks Rank #3. However, that alone is not sufficient to secure an earnings beat.

Please note that we caution against Sell-rated (Zacks Rank #4 or 5) stocks going into an earnings announcement, especially if the company has been seeing negative estimate revisions.

Stocks to Consider

Investors who are interested in the transportation space may consider the following stocks. This is because our model shows that these companies too possess the right combination of elements to post an earnings beat this quarter.

Spirit Airlines SAVE has a Zacks Rank #2 and an Earnings ESP of +1.37%. It is scheduled to report fourth-quarter results on Feb 7. The company beat the Zacks Consensus Estimate in each of the last four quarters with an average positive surprise of 4.71%. You can see the complete list of today's Zacks #1 Rank stocks here.

C.H. Robinson Worldwide CHRW has a Zacks Rank #3 and an Earnings ESP of +2.38%. It is scheduled to report fourth-quarter results on Jan 31. The company beat the Zacks Consensus Estimate in two of the last four quarters.

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C.H. Robinson Worldwide, Inc. (CHRW): Free Stock Analysis Report

United Parcel Service, Inc. (UPS): Free Stock Analysis Report

FedEx Corporation (FDX): Free Stock Analysis Report

Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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