CNBC Stock Blog

2010 Could be 'Very Good' for Transports: Analyst


Profits and sales were down for another quarter at UPS, but investors will be looking ahead to the upcoming holiday season to see if the world's largest shipping carrier—and the U.S. economy—are on the road to recovery.

UPS Earnings Analysis

Arthur Hatfield, transportation analyst at Morgan Keegan, shared his analysis of the transport firm.

UPS' challenge is "still the economy, but within the numbers, while they were very negative year-over-year, we started to see some sequential improvement from the second quarter,” Hatfield told CNBC.

“Margins were down year-over-year, but they were flat relative to second quarter. Volumes even in the U.S. were up about 1.5 percent in the third quarter relative to the second quarter.”

CNBC Data Pages:

Hatfield said he sees some early signs of U.S. economic improvement this year despite the weak economy.

“We’re not getting back to where we were in early 2008 or 2007 overnight—it will take some time—but directionally, things are getting slightly better,” he said.

Hatfield's Recommendation:

Hatfield said he has an “outperform” rating on UPS and expects the company to see a pickup in profitability next year.

“Fourth quarter is going to be difficult, but we will see some sequential improvement again,” he said. “But I think 2010 could be a very good year for transportation companies.”

More Market Intelligence:

CNBC Slideshows:


Companies That Reported Earnings This Morning:


  • McDonald's Posts Strong Profit, Predicts Solid Sales


  • AT&T Results Top Estimates with iPhone Help


  • Merck Beats Profit Forecasts, Helped by Cost Cuts


  • Xerox Reports Earnings Drop But Raises Outlook


An affiliate of Morgan Keegan & Company received compensation for products or services other than investment banking from UPS in the past 12 months.