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The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 2.02%. The Zacks Consensus Estimate for third-quarter 2023 earnings has been revised 30.77% downward over the past 60 days.
Given this backdrop, let’s delve deeper to unearth the factors likely to have influenced UPS’ performance in the to-be-reported quarter.
We expect high labor costs to have hurt UPS’ bottom-line performance in the quarter under review. The labor deal inked with International Brotherhood of Teamsters in August is likely to have resulted in increased labor costs. High fuel costs are likely to affect bottom-line results as well.
Apart from the adverse effects of labor negotiations, weakening demand due to economic slowdown has also led to a decline in the volume of packages shipped. We expect average daily volumes (consolidated) to plunge 11% in third-quarter 2023 from third-quarter 2022 levels. Revenues are likely to have suffered due to the weak demand scenario.
To combat the lackluster demand scenario and an uptick in labor costs, UPS is looking to cut total expenses through various avenues. Our model predicts total adjusted operating expenses for third-quarter 2023 to decline 6.6% from third-quarter 2022 actuals.
What Our Model Says
Our proven model does not conclusively 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 an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
UPS has an Earnings ESP of -0.05% and a Zacks Rank #3.
Highlights of Q2
UPS reported second-quarter 2023 earnings per share of $2.54, which beat the Zacks Consensus Estimate of $2.51 but declined 22.8% year over year. Revenues of $22,055 million fell short of the Zacks Consensus Estimate of $22,879.7 million and decreased 10.9% year over year. Overall adjusted operating profit fell 18.4% year over year to $2,919 million in the second quarter.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this time around.
NSC is scheduled to report third-quarter 2023 earnings on Oct 25. It has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark on the other occasion), the average beat being 3%.
Copa Holdings (CPA - Free Report) has an Earnings ESP of +4.60% and a Zacks Rank #3. CPA is scheduled to report third-quarter 2023 earnings on Nov 15.
We expect upbeat air-travel demand to have aided CPA’s third-quarter performance. CPA has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters by an average of being 15.13%.
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UPS Gears Up to Release Q3 Earnings: What's in the Offing?
United Parcel Service (UPS - Free Report) is scheduled to report third-quarter 2023 results on Oct 26 before market open.
The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 2.02%. The Zacks Consensus Estimate for third-quarter 2023 earnings has been revised 30.77% downward over the past 60 days.
Given this backdrop, let’s delve deeper to unearth the factors likely to have influenced UPS’ performance in the to-be-reported quarter.
We expect high labor costs to have hurt UPS’ bottom-line performance in the quarter under review. The labor deal inked with International Brotherhood of Teamsters in August is likely to have resulted in increased labor costs. High fuel costs are likely to affect bottom-line results as well.
Apart from the adverse effects of labor negotiations, weakening demand due to economic slowdown has also led to a decline in the volume of packages shipped. We expect average daily volumes (consolidated) to plunge 11% in third-quarter 2023 from third-quarter 2022 levels. Revenues are likely to have suffered due to the weak demand scenario.
To combat the lackluster demand scenario and an uptick in labor costs, UPS is looking to cut total expenses through various avenues. Our model predicts total adjusted operating expenses for third-quarter 2023 to decline 6.6% from third-quarter 2022 actuals.
What Our Model Says
Our proven model does not conclusively 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 an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
UPS has an Earnings ESP of -0.05% and a Zacks Rank #3.
Highlights of Q2
UPS reported second-quarter 2023 earnings per share of $2.54, which beat the Zacks Consensus Estimate of $2.51 but declined 22.8% year over year. Revenues of $22,055 million fell short of the Zacks Consensus Estimate of $22,879.7 million and decreased 10.9% year over year. Overall adjusted operating profit fell 18.4% year over year to $2,919 million in the second quarter.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this time around.
Norfolk Southern Corporation (NSC - Free Report) has an Earnings ESP of +0.31% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
NSC is scheduled to report third-quarter 2023 earnings on Oct 25. It has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark on the other occasion), the average beat being 3%.
Copa Holdings (CPA - Free Report) has an Earnings ESP of +4.60% and a Zacks Rank #3. CPA is scheduled to report third-quarter 2023 earnings on Nov 15.
We expect upbeat air-travel demand to have aided CPA’s third-quarter performance. CPA has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters by an average of being 15.13%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.