United Parcel Service UPS is scheduled to report its third-quarter 2026 results on Oct. 27, before the market opens. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $1.63 and $22.23 billion, respectively.
The bottom-line projection indicates a year-over-year decline of 6.3%. The consensus mark for the to-be-reported quarter has remained stable over the past 60 days. The Zacks Consensus Estimate for quarterly revenues implies a year-over-year expansion of 3.8%.
For 2026, the Zacks Consensus Estimate for UPS’ revenues is pegged at $91.71 billion, implying a 3.4% year-over-year uptick. The consensus mark for 2026 EPS is pegged at $7.19, indicating a year-over-year improvement of 0.4%.
This package delivery company’s earnings beat estimates each of the past four quarters, with the average surprise being 12.4%.
United Parcel Service, Inc. Price and EPS Surprise
United Parcel Service, Inc. price-eps-surprise | United Parcel Service, Inc. Quote
Q3 Earnings Whispers for UPS
Our proven model predicts an earnings beat for UPS for the September quarter. 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. That is exactly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
UPS has an Earnings ESP of +0.95% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping UPS’ Quarterly Performance
We expect the still-ongoing macro uncertainty due to the Middle East conflict to have dented UPS’ performance in the September quarter. The ongoing conflict in the Middle East has resulted in a sharp jump in oil prices. This has been naturally hurting the bottom line of transportation stocks, like UPS. This is because fuel expenses represent a key input cost for a transportation company.
UPS’ decision to scale back business with Amazon AMZN is expected to have kept third-quarter volumes muted. Management reached an agreement in principle with Amazon to reduce the e-commerce giant’s volume by more than 50% by June 2026. CEO Carol Tome noted that Amazon was not the company’s most profitable customer . The reduction in volumes is compelling UPS to right-size its network. We expect overall volumes to decline 5.4% year over year in the September quarter.
That said, third-quarter results are likely to reflect UPS’ efforts toward improving profitability over sheer volume, through its "Better, Not Bigger" strategy. Under the cost-cutting initiatives, UPS has substantially reduced its U.S. operational workforce and closed daily operations at multiple leased and owned buildings. Moreover, UPS has been focusing on increasing automation in sorting and operations and leveraging AI for logistics planning to boost efficiency.
The shift in focus toward higher-margin areas such as small and medium-sized businesses or SMBs and healthcare logistics from low-margin volumes (like Amazon) is expected to be reflected in UPS’ first-quarter results. Notably, SMBs contributed 34.5% to total U.S. volume in the June quarter, reflecting a 250-basis-point year-over-year improvement. We expect SMBs to have performed strongly in the September quarter as well, boosting results.
UPS Underperforms on Price Front
Shares of UPS have declined marginally year to date (“YTD”), similar to the Zacks Transportation-Air Freight and Cargo industry. Shares of rival FedEx FDX have seen a single-digit (% -wise) rise in the same timeframe.
YTD Price Comparison
On the basis of the forward 12-month Price/Sales (P/S), UPS’ shares are trading at a discount compared with the industry average. FedEx is cheaper. UPS and FedEx each currently have a Value Score of B.
Investment Thesis for UPS Stock
UPS is looking to grow its per-package revenues by gaining more business in segments like healthcare. A few years back, UPS acquired Bomi Group, an industry-leading multinational healthcare logistics provider. Last year, UPS acquired Andlauer Healthcare Group as part of its commitment to offer global specialty capabilities.
Because of this strategic shift, UPS did not increase its quarterly dividend this year, keeping it at $6.56 annually. In the event of the company failing to put an end to its struggles through the strategic shift, the high payout ratio may lead to a dividend cut, which would be disastrous for dividend investors.
End Note
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 macro uncertainties and volume declines, are hard to ignore.
So, all in all, it is worth holding on to UPS stock for now. Betting on the stock ahead of its upcoming results does not seem like a good idea. It is better to wait for management’s commentary on volumes and cost-cutting efforts, apart from the updated 2026 guidance, to get more clarity on near-term prospects.
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This article originally published on Zacks Investment Research (zacks.com).