Earnings Preview: UPS

By HARRY R. WEBER

posted: 37 DAYS 3 HOURS AGO

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ATLANTA -UPS Inc., the world's largest shipping carrier, reports third-quarter results on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The Atlanta-based company is expected to post an adjusted profit for the July-September quarter that is smaller than a year ago.

Often seen as an economic bellwether, UPS' financial performance is closely watched. Sales are being hurt by the soft economy, as people ship slower and less often.

The company has been working to cut costs to weather the downturn.

Rival Memphis, Tenn.-based FedEx Corp. said last month that it sees signs of improvement in the global economy as international shipments pick up, but it warned its profit will remain weak at least through the end of the year.

FedEx indicated it might start beefing up schedules for flight crew and hourly personnel as package volume improves, but it didn't expect that to happen soon.

UPS, also known as United Parcel Service, delivers packages and provides supply chain and freight services. It serves more than 200 countries and territories worldwide.

BY THE NUMBERS: Analysts polled by Thomson Reuters, on average, expect UPS to post a profit of 52 cents a share on revenue of $11.2 billion. Analysts' projections generally exclude one-time items. The company posted a net profit of $970 million, or 96 cents a share, in the third quarter of 2008 on sales of $13.11 billion.

ANALYST TAKE: JP Morgan analyst Thomas R. Wadewitz said in a research note last month that his firm believed that UPS was being viewed as having less operating leverage and that perception had been a major driver of the underperformance in UPS stock versus most of its industry peers in 2009 to that point. "In our view, UPS stock has lagged too much, and the stock does not reflect the boost a turn in the U.S. economy would provide to UPS earnings performance and to the stock," he wrote. The analyst said he believes that gradual improvement in parcel/express volumes is likely.

WHAT'S AHEAD: The holiday shipping season is approaching. It is usually the busiest time of the year for shippers like UPS. Industry observers will be eyeing UPS' volume numbers to get a clearer picture about the prospects for a strong economic recovery.

STOCK PERFORMANCE: UPS shares rose 12 percent on a split-adjusted basis during the third quarter. The stock closed at a split-adjusted $50.42 on July 1 and ended the quarter Sept. 30 at $56.47.

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On the Net:

UPS Inc.: http://www.ups.com

2009-10-20 13:22:01