You say Alcoa is a leading indicator? Intel's got the best clues for tech performance? JPMorgan tells us the health of the banking industry? Perhaps. But a lot of folks think real proof that the recession is over won't arrive until UPS (NYSE: UPS) confirms it -- and wouldn't you know it? "Big Brown" reports earnings Thursday. Is it up to the task?

What analysts say

  • Buy, sell, or waffle? Rarely has a stock been so loved. Out of the 23 analysts who track UPS, 18 rate it a "buy," and the rest don't mind holding it.
  • Revenues. Revenues are expected to rise 11% year over year, to $12.38 billion.
  • Earnings. Profits could soar as high as $0.88 a share, a 60% spike.

What management says
And that's just the start of the good news. You see, FedEx (NYSE: FDX) may have underwhelmed investors last month when it confirmed the deleterious effect of price competition in the less-than-truckload shipping market. But thanks to its acquisition of Watkins, FedEx seems more committed to the market, and as a result to competition from YRC Worldwide (Nasdaq: YRCWD), Con-way (NYSE: CNW), and the like. As a result, UPS, at last report, was sticking to full-year projections of up to $3.45 per share in profits this year.

What management does
How will UPS turn an 11% rise in sales into 60% greater profits? Well, last quarter the company grew earnings 90% on a 13% spike in sales, so it does seem doable. And if UPS does it, it'll do it by returning profit margins to their former glory:

Margins

03/09

06/09

09/09

12/09

03/10

06/10

Gross

23.8%

23.1%

22.2%

21.8%

21.6%

22.5%

Operating

10.6%

10.0%

8.9%

8.9%

9.1%

10.1%

Net

5.0%

4.4%

3.6%

4.8%

5.0%

5.7%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says
I hardly need to remind UPS investors of the magical power of "leverage" for this company. When you've got to run the same route, come hell, high water, or reduced Internet shopping, you're spending basically the same amount on trucks, tires, and gasoline in any given year. What matters -- what affects your bottom line -- is how many packages you get to drop off on those routes. Each additional package means more revenue dropping to the bottom line; fewer packages mean less revenue on the bottom line.

Which is precisely what makes UPS such an attractive proxy for the market. If Big Brown tells us Thursday that business is brisk, it won't just be UPS shareholders cheering. This will be cause for rejoicing by all.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.

FedEx is a Motley Fool Stock Advisor recommendation. United Parcel Service is a Motley Fool Income Investor pick. The Fool owns shares of FedEx, Intel, and United Parcel Service. Intel is a Motley Fool Inside Value recommendation. Motley Fool Options has recommended buying calls on Intel.

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