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TheStreet) -- The impact of Europe's economic decline will be closely watched as U.S. global transportation companies report earnings -- particularly on July 26, when
Ford(F - Get Report),
UPS(UPS - Get Report) and
Delta(DAL - Get Report) all report.
Each has a major presence in Europe. Ford is Europe's second-largest automaker. UPS is the leading U.S. overnight package company in Europe, while
FedEx(FDX - Get Report) has a bigger presence in Asia. Delta has the largest trans-Atlantic system of the U.S. airlines.
Among them, Ford appears to have the most exposure. The automaker has already said it
will lose about $570 million in Europe in the second quarter.
GM(GM - Get Report)last week removed the head of GM Europe and temporarily replaced him with Vice Chairman Steve Girsky. GM is expected to have losses in Europe when it reports second-quarter results on Aug. 2.
In a recent report, UBS analyst Colin Langan wrote that Ford's European losses are already priced in to the share price. Partially as a result, "Ford offers better risk/reward than GM," he said. Since Ford's June 28 announcement of its projected losses, its shares have declined 6%, while GM shares have been flat.
Ford is outperforming GM in North America, where its production is up 4% to GM's 2%, with Ford's increase disproportionately including profitable full-size pickup trucks, Langan said. In Europe, he expects single-digit production declines for both companies.
"Near-term upside could be limited given EU headwinds," he wrote. His full-year earnings estimates are $1.45 a share for Ford and $3.60 for GM, while analysts surveyed by Thomson Reuters estimate $1.31 for Ford and $3.21 for GM.
Still, Langan has buys on both companies due to low valuations. Meanwhile, S&P Capital IQ analyst Efraim Levy has a buy on Ford, but on Tuesday he reduced his full-year estimate to $1.34 a share and his 12-month price target to $13 "to reflect deteriorating performance in certain international markets, particularly Europe." Ford lost market share in Europe in June, Levy wrote.
As for GM, analysts estimate second-quarter earnings of 76 cents a share. Jefferies analyst Peter Nesvold estimates 75 cents, noting in a report that "GM has posted an annual loss in Europe for the past 12 years in a row, totaling $12.4 billion in losses, (while) Ford has earned a profit in the past seven out of eight years in Europe, for a cumulative $2.95 billion profit."