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United Parcel Service Stock ahead of Q3 Earnings

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United Parcel Service’s Q3 earnings

United Parcel Service (UPS), the world’s premier express delivery giant, is set to announce its third-quarter earnings on October 24. It says it will issue the results in a press release that day at 7:00 AM EST and have a conference call at 8.30 AM EST to discuss the results with investors and Wall Street analysts.

 Indexed

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Global and US e-commerce sales

According to Statista, retail e-commerce sales around the globe totaled $2.3 trillion in 2017. Revenues for e-retail are expected to grow to $4.88 trillion by 2021. Online US sales of tangible merchandise was $446.8 billion in 2017 and are predicted to cross $700 billion by 2022. Statista stated that the United States ranks behind many nations in terms of e-commerce sales as a percentage of total retail sales.

In 2016, China’s share of e-retail sales in total retail sales was ~20%, which was much higher than US sales of 8.1%. Retail e-commerce’s share in total retail sales is more in countries such as the United Kingdom, Denmark, and South Korea than in the United States. That offers a solid opportunity for LTL (less-than-truckload) companies and parcel delivery companies such as UPS and FedEx (FDX). However, the current US-China trade war has cast a shadow over their future growth.

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UPS’s stock return

On October 22, UPS stock closed at $115.64, down 0.82% from October 21 at $116.60. In 2018, the stock returned -6.5% to shareholders, whereas its one-year return was -3%. Competitor FedEx returned -15.2% as of October 22 and -3.07% in the past year.

Amazon’s ambitions in parcel delivery to customers made courier delivery stocks nervous in recent quarters. Let’s compare UPS’s 2017 returns with its peer group.

The benchmark ETF, the SPDR S&P Transportation ETF (XTN), returned 0.50% in the last year.

In this series

In this pre-earnings series for United Parcel Service, we’ll look at analysts’ revenue and earnings estimates ahead of the third quarter earnings release. Then we’ll see how analysts view UPS and its peers.

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