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UPS Gears Up to Release Q1 Earnings: What's in the Offing?

United Parcel Service UPS is scheduled to report first-quarter 2024 results on Apr 23, before market open.

The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 1.38%. The Zacks Consensus Estimate for first-quarter 2024 earnings has been revised 15.3% downward over the past 60 days.

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 deeper to unearth the factors likely to have influenced UPS’ performance in the to-be-reported quarter.

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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 last year is likely to have resulted in increased labor costs. High fuel costs are expected to affect bottom-line results as well.

Apart from the adverse effects of labor negotiations, weakening demand due to economic slowdown is expected to have resulted in a decline in the volume of packages shipped. We expect average daily volumes (consolidated) to decrease 15% in first-quarter 2024 from fourth-quarter 2023 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 first-quarter 2024 to decline 8.9% from fourth-quarter 2023 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 -3.24% (the Most Accurate Estimate is currently pegged at $1.29 per share, whereas the Zacks Consensus Estimate is currently pegged at $1.33 per share) and a Zacks Rank #3.

Highlights of Q4

UPS’ fourth-quarter 2023 earnings per share of $2.47 beat the Zacks Consensus Estimate of $2.44 but declined 31.7% year over year. Revenues of $24.91 billion fell short of the Zacks Consensus Estimate of $25.30 billion and decreased 7.8% year over year.

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 their first-quarter 2024 earnings.

American Airlines AAL has an Earnings ESP of +6.51% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AAL is scheduled to report first-quarter 2024 earnings on Apr 25. The Zacks Consensus Estimate for first-quarter earnings has declined 21.74% over the past 60 days. AAL has surpassed the Zacks Consensus Estimate in each of the preceding four quarters. The average beat is 119%.

Westinghouse Air Brake Technologies WAB has an Earnings ESP of +4.98% and a Zacks Rank #3. WAB is scheduled to report first-quarter 2024 earnings on April 24.

WAB has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 6.63%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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

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

American Airlines Group Inc. (AAL) : Free Stock Analysis Report

Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report

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