UPS to Report Q2 Earnings: What's in Store for the Stock?

United Parcel Service UPS is scheduled to report second-quarter 2020 earnings on Jul 30, before market open.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been stable at $1.06 per share over the past 60 days. Moreover, the company has an impressive earnings history. Its bottom line outperformed the Zacks Consensus Estimate in three of the last four quarters. UPS lagged estimates 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-eps-surprise | United Parcel Service, Inc. Quote

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

We expect the surge in e-commerce demand amid the current pandemic situation to boost UPS’ second-quarter results. This is because the need for door-to-door delivery of essentials during this unprecedented crisis is rising continuously.

Moreover, UPS Airlines, one of the largest cargo airlines across the globe, is aided by the spurt in e-commerce sales amid the plaguing pandemic. To meet the swell in e-commerce demand and also to cater to the urgent requirement for flying cargos, UPS Airlines expanded its fleet. Increased cargo revenues are likely to have driven UPS’ top line in the to-be-reported quarter.

However, coronavirus-induced supply-chain disruptions might have dented UPS’ June-quarter performance. Moreover, the Supply Chain and Freight unit is expected to have performed disappointingly due to slowdown in economic activity.

Earnings Whispers

Our proven model does not predict 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 odds of a positive surprise. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: UPS has an Earnings ESP of -12.31% as the Most Accurate Estimate lags the Zacks Consensus Estimate by 13 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 #3, currently.

Highlights of Q1 Earnings

UPS' first-quarter 2020 earnings (excluding 4 cents from non-recurring items) per share of $1.15 missed the Zacks Consensus Estimate by 6 cents. The bottom line also declined 17.3% year over year.

However, performance on the top-line front was encouraging despite the coronavirus woes. UPS generated revenues worth $18,035 million in the quarter, surpassing the Zacks Consensus Estimate of $17,420.3 million.

Stocks to Consider

Investors interested in the broader Transportation sector may check out a few stocks worth considering like Allegiant Travel Company ALGT, JetBlue Airways JBLU and Air Lease Corporation AL as these possess the perfect combination of elements to beat estimates this earnings season.

Allegiant Travel has an Earnings ESP of +9.35% and a Zacks Rank of 3, currently. This company is set to release second-quarter financial numbers on Jul 29.

JetBlue presently has an Earnings ESP of +19.18% and is a #3 Ranked player. The company will release second-quarter 2020 results on Jul 28.

Air Lease has an Earnings ESP of +23.32% and is Zacks #3 Ranked at present. The company will release second-quarter 2020 results on Aug 6

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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.

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