United Parcel (UPS) Q3 Earnings: Disappointment In Store?

Leading logistics provider, United Parcel Services (NYSE:UPS) is scheduled to report third-quarter 2016 results on Oct 27, before the market opens.

Last quarter, United Parcel’s earnings met the Zacks Consensus Estimate. The company has surpassed estimates in three of the last four quarters with the average earnings beat at 4.23%.

Factors at Play

United Parcel’s third-quarter earnings are likely to be adversely impacted by the volatility in foreign exchange markets. Given that the company operates across various geographical regions, currency-related woes can hurt the bottom line. Lower fuel charges are also expected to limit earnings growth. Moreover, United Parcel faces tough competition from peers like FedEx Corporation (NYSE:FDX) .

However, we expect the company’s top line to benefit from its high level of customer services and operational efficiency. United Parcel puts in considerable efforts for the constant training and development of its personnel and to improve its operations. We also expect the company’s rapid expansion in various regions to boost revenues.

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 -2.78%, as the Most Accurate estimate stands at $1.40 while the Zacks Consensus Estimate is pegged at $1.44. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: United Parcel carries a Zacks Rank # 4 (Sell).

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

Stocks to Consider

Here are two transportation companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.

Navios Maritime Holdings Inc. (NYSE:NM) , which is expected to report third-quarter earnings on Nov 28, has an Earnings ESP of +16.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Green Plain Partners LP (NASDAQ:GPP) is scheduled to report third quarter earnings on Nov 1. The company has an Earnings ESP of +2.33% and a Zacks Rank #2

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