Leveraging Zacks Earnings ESP to Outperform the Market in Transportation Stocks: A Strategic Guide for Earnings Season

The transportation sector, a critical barometer of global economic health, has long been a battleground for investors seeking to capitalize on earnings surprises. As 2025 draws to a close, the Zacks Earnings ESP (Expected Surprise Prediction) emerges as a powerful tool for identifying stocks poised to outperform expectations. By dissecting the earnings forecasts and historical performance of key players like United Parcel Service (UPS) and FedEx (FDX), this analysis outlines a actionable strategy for navigating the volatility of earnings season.

The Zacks Earnings ESP: A Strategic Edge

The Zacks Earnings ESP quantifies the likelihood of a company beating or missing earnings estimates by analyzing the accuracy of analyst forecasts. A positive ESP signals that the most accurate estimate exceeds the consensus, increasing the probability of an outperforming result. For transportation stocks, where seasonal demand and operational efficiency heavily influence performance, this metric offers a nuanced edge.

FedEx (FDX) exemplifies the potential of ESP-driven investing. As of December 2025, FDX carries a Zacks Rank #2 (Buy) and an Earnings ESP of +1.38%, indicating that the most accurate estimate of $4.10 exceeds the Zacks Consensus Estimate of $4.05. This optimism is bolstered by a 1.5% upward revision in the consensus estimate over the past 60 days, reflecting improved analyst sentiment. Historically, FDX has exceeded expectations in three of the past four quarters, with its most recent EPS of $4.82 far outpacing the $4.07 consensus, a 18.43% surprise. Management attributes this strength to robust holiday demand and cost-cutting initiatives under the DRIVE program, alongside a multi-year contract with Amazon.

UPS: A Cautionary Contrast

In contrast, United Parcel Service (UPS) presents a more ambiguous picture. While its Q3 2025 earnings of $1.74 per share beat the $1.31 consensus, the trailing twelve months (TTM) EPS of $6.48 as of September 2025 marks a decline from $7.81 in 2023 according to Full Ratio data. The Zacks Consensus Estimate for the December 2025 quarter is $2.20 per share according to Zacks data, but no specific Earnings ESP percentage is available, complicating a direct comparison with FDX. This lack of granular data underscores a limitation in relying solely on consensus estimates, as UPS's historical ESP performance from 2020–2025 remains inaccessible.

Actionable Strategy: Prioritize Positive ESP and Analyst Revisions

The contrasting cases of FDX and UPS highlight a key takeaway: investors should prioritize stocks with both a positive Earnings ESP and upward revisions in consensus estimates. FDX's combination of a +1.38% ESP, recent outperformance, and improving analyst sentiment positions it as a compelling candidate for earnings season. Conversely, UPS's mixed performance and data gaps suggest a need for caution, even as its upcoming January 2026 report (estimated at $2.18 EPS according to AlphaQuery data) could offer new insights.

Conclusion: Navigating Earnings Season with Precision

As the transportation sector braces for the final earnings reports of 2025, the Zacks Earnings ESP provides a roadmap for identifying stocks with a higher probability of outperforming. By focusing on companies like FDX-where strong ESP metrics align with operational catalysts-investors can mitigate the risks of earnings volatility. In an environment where surprises often drive market movements, this data-driven approach offers a strategic edge.