UPS (UPS) is scheduled to report results of its fiscal second quarter before the market open on Wednesday, July 24, with a conference call scheduled for 8:30 am ET. What to watch for: 1. GUIDANCE: When UPS reported its first quarter results on April 25, the company reaffirmed its fiscal 2019 adjusted earnings per share guidance of $7.45-$7.75, against analyst estimates of $7.53 at that time. UPS also announced that it saw FY19 adjusted free cash flow of $3.5B-$4B. The company said, “Adjusted free cash flow for the year is projected to be between $3.5B and $4B with potential additional upside from the working capital initiatives. The effective tax rate for 2019 is estimated to be between 23% and 24%. In the second quarter, we will open about 30% of our planned 2019 capacity; no facilities were opened during the same period last year. Thus onboarding costs will weigh on the second-quarter results. Overall operating profit in the second quarter is expected to grow. Adjusted EPS is anticipated to be relatively flat to last year driven by planned pension financing costs. Third-quarter adjusted EPS is expected to benefit from numerous items including one additional operating day and year-over-year International benefits from 2018 commodities headwinds that should not repeat. Transformation-related charges and pension MTM are not included in the adjusted guidance.” 2. GOLDMAN SACHS INITIATES UPS WITH A BUY: On July 10, Goldman Sachs analyst Jordan Alliger started UPS with a Buy rating and a $123 price target. The analyst said he believes the company’s “significant ramp” in capital investment funded in 2018-2020 is expected to generate margin leverage beginning in the second half of 2019 and accelerate through 2022. Alliger also cited the “significant discount” in UPS valuation at 13.6-times multiple on his expected next 12-month earnings estimate. 3. FEDEX RESULTS: On June 25, FedEx (FDX) reported Q4 adjusted EPS of $5.01 and revenue of $17.8B, against analyst expectations of $4.93 and $17.88B, respectively. FedEx also reported Q3 adjusted operating margin of 5.8%, flat when compared to last year. Additionally, FedEx cut its FY19 EPS view again to $15.10-$15.90 from $15.50-$16.50, against analyst expectations of $15.97, at that time. During the Q4 earnings conference call, FedEx management called FY20 a “transition year” for the company.