Back to top

Image: Bigstock

Can UPS Deliver a Beat in Q1 Earnings on E-Commerce Boom?

Read MoreHide Full Article

United Parcel Service (UPS - Free Report) is scheduled to report first-quarter 2021 earnings on Apr 27, before market open.

The Zacks Consensus Estimate for first-quarter earnings has been revised upward by 8.7% in the past 90 days. Moreover, the company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the past four quarters (missed estimate in the other), the average beat being 37.1%.
 
Let’s see how things are shaping up for this earnings season.

Factor to Note

UPS’ first-quarter performance is expected to have benefited from coronavirus-driven surge in e-commerce demand. Higher residential delivery volumes are expected to reflect in the U.S. Domestic Package segment’s (contributes majority of the top line) revenues.

However, the segment’s performance might have been partly affected by the anticipated decline in business-to-business average daily volumes due to coronavirus-induced weakness in the industrial sector. The Zacks Consensus Estimate for U.S. Domestic Package revenues in the first quarter indicates a 12.9% rise from the year-ago reported figure.

Additionally, the International Package division is likely to have put up a good show on the back of strong outbound demand from Asia. The Zacks Consensus Estimate for International Package revenues suggests an approximate 17% rise from the year-ago reported number.

Revenues at the Supply Chain and Freight are likely to have been boosted by higher demand for freight forwarding. The Zacks Consensus Estimate for Supply Chain and Freight revenues hints at a 22.6% surge from first quarter of 2020’s reported number.

Earnings Whispers

The proven Zacks model predicts 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 chances of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: UPS has an Earnings ESP of +2.07% as the Most Accurate Estimate is pegged at $1.66, higher than the Zacks Consensus Estimate of $1.63. 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.

Highlights of Q4 Earnings

In the last-reported quarter, UPS delivered an earnings surprise of 26.1%. The bottom line also improved 26.1% year over year. Quarterly revenues surpassed the Zacks Consensus Estimate and also climbed 21% year over year, driven by higher average daily volumes owing to rise in e-commerce demand.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider Southwest Airlines Co. (LUV - Free Report) , Herc Holdings (HRI - Free Report) and JetBlue Airways Corp. (JBLU - Free Report) as these stocks too possess the right combination of elements to beat estimates this reporting cycle.

Southwest Airlines has an Earnings ESP of +1.07% and a Zacks Rank #3. The company will release first-quarter 2021 earnings on Apr 22.

Herc Holdings has an Earnings ESP of +18.81% and carries a Zacks Rank #2. The company will release first-quarter 2021 results on Apr 22.

JetBlue Airways has an Earnings ESP of +6.94% and a Zacks Rank #3. The company is set to release first-quarter 2021 earnings numbers on Apr 27.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?

Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top 10 Stocks for 2021 today >>