Earnings Preview: United Parcel Service

United Parcel Service (UPS) is expected to report Q2 earnings before market open Tuesday, July 22, with a conference call scheduled for 9:00 a.m. ET.

Guidance

Analysts are looking for EPS of 85c on revenue of $12.81B. There is a tight consensus range for EPS of 83c to 86c, while the consensus range for revenue is $12.16B to $13.09B, according to First Call. The company gave guidance for Q2 EPS when it reported its Q1 results, but lowered its guidance on June 23. United Parcel Service lowered its Q2 EPS range to 83c to 88c from 97c to $1.04, the EPS consensus at the time the company lowered its guidance was 97c. When the company reported its Q1 earnings it also lowered FY08 EPS view to $3.90 to $4.20 from $4.30 to $4.50, the consensus for FY08 EPS has since lowered to $3.64 from $4.17. The slowing U.S. economic growth and high fuel costs are expected to put a strain on United Parcel Service's results Q2.

Analyst Views

Analysts opinions differ on how to rate the company's stock. On June 24, Baird downgraded the company to Neutral from Outperform, following the Q2 pre-announcement. The firm also lowered its target to $72 from $86. Stifel Nicolaus however, upgraded the company to Buy from Hold on July 8 citing valuation. Investors will be waiting to see how much the economy and fuel cost have effected UPS's Q2 results.

Comments

[JohnPseudonym]

I ship a lot of packages.

UPS is my first choice.

The USPS is my second only if the price is right.

FedEx - not even in the picture.

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UPS is very smart with their pricing.

For the easy deliveries (in town near their buildings) they set the price even or below the Post Office.

For addresses out in the woods, they are far more expensive than the USPS.

So, UPS has shifted it's less profitable deliveries to the USPS while keeping the easy/profitable stuff for themselves; very smart!