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Globe and Mail
a day ago
- Business
- Globe and Mail
Buy, Hold or Sell UPS Stock? Key Tips Ahead of Q2 Earnings
United Parcel Service UPS is scheduled to report its second-quarter 2025 results on Tuesday, July 29, 2025. The Zacks Consensus Estimate for the June-quarter earnings is pegged at $1.56 per share, implying a 12.9% decrease from the year-ago quarter's reported number. The estimate has been revised downward by a cent over the past 60 days. The Zacks Consensus Estimate for revenues is pegged at $20.85 billion, indicating a decline of 4.4% from the year-ago quarter's actuals. UPS has an impressive earnings surprise history, as reflected in the chart below. Given this backdrop, let's examine the factors likely to influence UPS' Q2 results Shipping volumes at UPS are likely to have been hurt by geopolitical uncertainties and high inflation. Uncertainty over tariffs, supply chain instability, and other broader macroeconomic headwinds are likely to hurt results. We believe that more than the financial numbers, it is the guidance that investors will more closely watch. Labor costs are likely to have been high, hurting United Parcel Service's bottom-line performance in the June quarter. Faced with these headwinds, the company is focusing on cutting costs. As part of this exercise, UPS is offering buyouts to delivery drivers for the first time in its 117-year history. UPS' full-time drivers are eligible for this offer. We expect an update on the same on the conference call. The company reportedly aims to trim its workforce by 20,000 this year, representing approximately 4% of the global workforce and shut 73 facilities to streamline operations and lower labor costs. Apart from the tariff-induced economic uncertainties, UPS' decision to reduce business with its largest customer, Amazon AMZN, contributed to the decision to trim the workforce. UPS management has reached an agreement in principle with Amazon to lower the latter's volume by more than 50% by June 2026. According to Carol Tome, UPS' chief executive officer, Amazon was not its most profitable customer. Low fuel costs are expected to have aided UPS' bottom-line performance in the June-end quarter. We expect expenses on fuel to decrease 10.3% from second-quarter 2024 actuals. Crude oil has been struggling in 2025, with prices sliding to multi-month lows. Tariff concerns, weakening consumer confidence and production increase by OPEC+ have all contributed to this downward pressure. Q2 Earnings Whispers for UPS 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 chances of an earnings beat, which is not the case here. The company's Earnings ESP is -1.00%. This is because the Most Accurate Estimate is currently pegged at $1.55 per share, a cent below the Zacks Consensus Estimate. UPS currently carries a Zacks Rank #4 (Sell). You can see . You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter. Unimpressive Price Performance of UPS Stock Shares of UPS have plunged 26% over the past six months compared with its Zacks Transportation—Air Freight and Cargo industry's 21.3% decline. Rival FedEx 's FDX price performance is better than that of UPS. 6- Month Price Comparison Image Source: Zacks Investment Research Valuation Picture On the basis of the forward 12-month Price/Sales (P/S), UPS shares are trading in line with the industry average. Rival FedEx is cheaper. FedEx currently has a Value Score of A, while UPS has a value score of B. UPS' P/S F12M Vs. Industry & FDX Investment Thesis for UPS Stock Due to the decline in shipping demand, volumes at UPS have suffered. A slowdown in online sales in the United States, apart from a softness in global manufacturing activity, has been hurting the demand scenario. Moreover, inflation continues to be on the higher side. Of late, U.S. markets have been characterized by a high degree of volatility amid uncertainty surrounding its trade policy and growing anxiety about a slowing economy. Concerns over the sustainability of UPS' dividends in this era of demand weakness represent a further challenge for this parcel delivery company. However, UPS' expansion efforts look good. What Should Investors Do With UPS Stock? It is worth noting that the company has the brand and the network to continue generating steady cash flows in the long run. This makes UPS a compelling long-term player in the transportation space. However, the near-term headwinds, including the tariff-induced uncertainties, are hard to ignore. The combination of its weak current performance and an uncertain future casts a shadow over UPS' prospects. Though the company has a solid track record of beating earnings estimates, it will be prudent for investors to stay away from investing in the stock for now and wait for the upcoming quarterly results to get more clarity on the company's near-term prospects. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%. Free: See Our Top Stock And 4 Runners Up Inc. (AMZN): Free Stock Analysis Report United Parcel Service, Inc. (UPS): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis Report
Globe and Mail
a day ago
- Business
- Globe and Mail
American Airlines Stock to Report Q2 Earnings: What's in the Cards?
American Airlines Group Inc. ( AAL ) is scheduled to report second-quarter 2025 results on July 24, before market open. American Airlines has an encouraging earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 46.11%. Let's see how things have shaped up for American Airlines this earnings season. Factors Likely to Have Influenced AAL's Q2 Performance The Zacks Consensus Estimate for AAL's second-quarter 2025 earnings has been revised upward by 2.60% in the past 60 days to 79 cents per share. However, the consensus mark implies a 27.52% downside from the year-ago actual. The consensus estimate lies within the company-provided guided range of 50 cents-$1.00. We expect geopolitical uncertainty, tariff-related pressures, and persistent inflation to weigh on AAL's operations and weaken travel demand. The ongoing economic uncertainties and the resultant reduction in consumer and corporate confidence are likely to have hurt the domestic air travel demand. Escalated labor and airport costs are also likely to have been high, which would have hurt the company's bottom-line performance in the June quarter. Despite costs on aircraft fuel decreasing year over year (down 12.8% in second-quarter 2025, as per our model), AAL expects to continue experiencing increased cost pressure from the labor agreements and deals inked with the pilots. We expect operating costs to increase 1.4% in second-quarter 2025 from second-quarter 2024 actuals, led by the 6.8% rise in salaries and related costs. For the second quarter of 2025, management expects total revenues to be down 2% to up 1% from the second quarter of 2024 actuals. The Zacks Consensus Estimate for AAL's second-quarter 2025 revenues is pegged at $14.29 billion, indicating a 0.3% decline year over year. The downside is likely to have been partially offset by improving travel demand and lower fuel prices. Notably, the southward movement of oil prices bodes well for the bottom-line growth of industry participants. This is because fuel expenses are a significant input cost for the aviation industry. Crude oil is struggling in 2025, with prices sliding to multi-month lows. Tariff concerns, weakening consumer confidence, and the production increase by OPEC+ have all contributed to this downward pressure. Oil prices decreased 6% in the April-June 2025 period. What Our Model Says About AAL Our proven model does not conclusively predict an earnings beat for American Airlines 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. But that's not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter. American Airlines has an Earnings ESP of -0.18% and a Zacks Rank #3 at present. American Airlines Group Inc. Price and EPS Surprise American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote Highlights of AAL's Q1 Earnings American Airlines' first-quarter 2025 loss (excluding 13 cents from non-recurring items) of 59 cents per share was narrower than the Zacks Consensus Estimate of a loss of 69 cents. In the year-ago quarter, AAL reported a loss of 34 cents per share. Operating revenues of $12.55 billion edged past the Zacks Consensus Estimate of $12.52 billion but decreased 0.2% 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 earnings this reporting cycle. SkyWest, Inc. SKYW has an Earnings ESP of +3.06% and a Zacks Rank #2 at present. SKYW is scheduled to report second-quarter 2025 earnings on July 24. You can see the complete list of today's Zacks #1 Rank stocks here. SkyWest, founded in 1972, is based in St. George and operates regional jets for major U.S. airlines. SKYW is the holding company for SkyWest Airlines, SkyWest Charter and SkyWest Leasing, an aircraft leasing company. SKYW has an impressive earnings surprise track record, having surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 17.1%. The Zacks Consensus Estimate for SKYW's second-quarter 2025 earnings has been revised 1.30% upward in the past 60 days. SKYW's second-quarter 2025 earnings are expected to grow 28.5% year over year. Knight-Swift Transportation Holdings Inc. ( KNX ) has an Earnings ESP of +3.22% and a Zacks Rank #3 at present. KNX is scheduled to report second-quarter 2025 earnings on July 23. KNX's second-quarter 2025 earnings are expected to grow 41.67% year over year. The Zacks Consensus Estimate for KNX's second-quarter 2025 earnings has been revised downward by 2.86% to 34 cents per share in the past 60 days. KNX's earnings beat the Zacks Consensus Estimate in three of the preceding four quarters (missed the mark in the remaining quarter), the average beat being 3.25%. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%. Free: See Our Top Stock And 4 Runners Up Knight-Swift Transportation Holdings Inc. (KNX): Free Stock Analysis Report SkyWest, Inc. (SKYW): Free Stock Analysis Report
Forbes
2 days ago
- Business
- Forbes
Prospects For Inflation On Main Street
Inflation has fallen dramatically since 2022, from 9% to just under 3%, getting closer to the Fed's target of 2%. It was a tough time for small businesses, plagued by forced business restrictions, supply chain disruptions, shortages of goods, rising labor costs, and an avalanche of new regulations and subsidies. Although the percent of small businesses raising selling prices has declined from its peak in 2022, it remains historically high (Chart 1); the inflation rate continues to stay stubbornly above the Fed's target. Labor costs, the largest operating expense for most small businesses, have remained high but have been trending downward since 2022. However, increased compensation costs have not risen as fast as prices, which is the mechanism for passing those costs on to customers and transmitting inflation. Changes in Price and Labor Compensation. NFIB Small Business Economic Trends. Cost changes in a non-inflationary environment drive price changes. Small businesses rarely find themselves in a monopolistic position except during emergency situations. A significant operating cost for labor-intensive businesses is employee compensation. The correlation between price increases and compensation increases is clearly demonstrated in Chart 1. Small Businesses Raising Wages and Job Openings by Industry. NFIB Small Business Economic Trends. Chart 2 shows the percent of small businesses in each industry group that have recently raised compensation and the percent reporting unfilled job openings. Construction leads with the greatest share of businesses with a job opening (65%). This industry also has the second-highest percent of businesses raising compensation (44%,10 points below finance), which is vital for retaining and attracting more employees. Residential real estate is under pressure, with a shortage of homes to meet demand, particularly at the less expensive end. The manufacturing and transportation industries were next highest on the list to raise compensation. They are also among the most optimistic, however the level of optimism is historically low in the current period. Measures of uncertainty are at historically high levels, as shown in Chart 3. NFIB's Uncertainty Index has averaged 65 since 1973, but it currently stands at 89, after peaking at 110 in October 2024. It is based on the percent of owners who give an 'uncertain' or 'don't know' response to six forward-looking questions. Uncertainty Index. NFIB Small Business Economic Trends. Small business owners in the transportation industry experienced the most uncertainty (due to mandates for electric trucks, fuel costs, etc.), with 31% scoring in the highest levels of uncertainty, 7 points ahead of the next closest industry. The wholesale trades, manufacturing, and construction industries followed. Retail business owners were the least troubled, as consumer spending remains solid. Uncertainty delays decision-making, including the choice 'not to raise prices.' With so many moving pieces, it is hard to solve the puzzle. In 2008, record numbers of small businesses reduced compensation and employment. Compensation increases diminished, and the frequency of price hikes fell dramatically. In recent quarters, this trend has reversed, with wage and price increases trending upward. This will keep pressure on inflation measures, making it hard for regulators to get inflation under control and keep it there.
Wall Street Journal
6 days ago
- Automotive
- Wall Street Journal
A Basic Buick That's Just Enough Car for the Money
Lately I have been accused of dragging politics into the supposedly safe space of car reviews. With all respect, it is I who am being dragged, by events too stupendous to ignore. Consider our test car, the 2025 Buick Envista Sport Touring ($30,465, as tested), a compact crossover powered by a three-cylinder engine and uncommonly good looks. Should I elide the fact that this vehicle is built in South Korea in order to take advantage of lower labor costs? Is it germane that the price may blow up, or not, in a few weeks, depending on which way the wind is blowing from the White House? You tell me.
Globe and Mail
07-07-2025
- Business
- Globe and Mail
UPS Looks to Cut Costs to Mitigate Demand Woes: What's the Road Ahead?
It is no secret that United Parcel Service 's UPS bottom line is being hurt by high costs, mainly on the labor front. High labor costs, in addition to softness concerning parcel volumes, are hurting the company's operations. Geopolitical uncertainty and high inflation continue to hurt consumer sentiment and growth expectations. The weak demand scenario due to the economic slowdown has led to a decline in the volume of packages shipped. Faced with these headwinds, the company is focusing on cutting costs. As part of this exercise, UPS is offering buyouts to delivery drivers for the first time in its 117-year history. UPS' full-time drivers are eligible for this offer. The company reportedly aims to trim its workforce by 20,000 this year, representing approximately 4% of the global workforce and shut 73 facilities to streamline operations and lower labor costs. Notably, expenses on compensation and benefits increased 2.1% year over year in 2024. The same is expected to decrease 2.6% in 2025 from 2024 levels, as per our model. Apart from the tariff-induced economic uncertainties, UPS' decision to reduce business with its largest customer, Amazon AMZN, contributed to the decision to trim the workforce. UPS' management has reached an agreement in principle with Amazon to lower the latter's volume by more than 50% by June 2026. According to Carol Tome, UPS' chief executive officer, Amazon was not its most profitable customer. UPS' rival FedEx FDX is also cutting costs to combat the weak demand scenario. FedEx reportedly will lay off more than 480 employees as it reshuffles operations through the Network 2.0 initiative. In the second quarter of 2023, FedEx announced DRIVE, a comprehensive program to improve its long-term profitability. The DRIVE program resulted in $1.8 billion in permanent savings in fiscal 2024. The program resulted in further $2.2 billion cost savings in fiscal 2025. These cost reduction initiatives include reducing flight frequencies, parking aircraft and cutting staff. For fiscal 2026, management expects to achieve $1 billion of transformation-related savings, which includes DRIVE and Network2.0. UPS' Price Performance, Valuation & Estimates Shares of UPS have declined in excess of 24% in a year, underperforming its industry. From a valuation standpoint, UPS trades at a 12-month forward price-to-earnings ratio of 13.91X, making it expensive compared with industrial levels. The Zacks Consensus Estimate for UPS' 2025 and 2026 earnings has been revised downward over the past 30 days. UPS' Zacks Rank UPS currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Only $1 to See All Zacks' Buys and Sells We're not kidding. Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone. See Stocks Now >> 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 Inc. (AMZN): Free Stock Analysis Report United Parcel Service, Inc. (UPS): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis Report
