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United Parcel (UPS) Lags Q4 Earnings & Sales; Stock Down
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United Parcel Service, Inc. (UPS - Free Report) reported fourth-quarter 2016 earnings of $1.63 per share, missing the Zacks Consensus Estimate by 5 cents. Earnings increased 3.82% year over year.
Revenues improved 5.5% over the year-ago quarter to $16.93 billion, missing the Zacks Consensus Estimate of $16.96 billion. Results were hurt by the shift in product mix and weakness in industrial production.
Segmental Details
U.S. Domestic Package revenues climbed 6.3% year over year to $10.9 billion in the reported quarter. Segmental operating profit improved marginally to $1.3 billion.
Segmental average daily package volumes climbed 5% driven by a 5.4% rise in Ground products and 4.4% growth in Next Day Air services. Deferred Air products were up 2.8%. Average revenue per piece declined marginally.
International Package revenues improved 5% to $3.3 billion despite foreign currency movements hurting the top line. Export shipments improved 8.4% in the fourth quarter on the back of growth in Europe and Asia.
Segmental operating profits grew 13% in the quarter to $706 million. Revenue per piece declined 2.9%.
Supply Chain and Freight revenues increased 2.6% to $2.68 billion. Segmental results were aided by the acquisition of Coyote Logistics, which was completed in the third quarter of 2015. Operating profits in the segment declined to $179 million in the quarter under review.
United Parcel Service, Inc. Price, Consensus and EPS Surprise
United Parcel, which like its rival FedEx Corporation (FDX - Free Report) , had left no stone unturned to ensure a successful holiday season, generated free cash flow of $3.5 billion and spent $2.96 billion as capital expenditure in 2016. Moreover, United Parcel paid approximately $2.8 billion as dividend to shareholders in 2016. Additionally, it bought back 25.5 million shares for $2.7 billion. We are impressed with the company’s efforts to reward shareholders consistently through buybacks and dividend payouts.
Outlook
United Parcel is a Zacks Rank #3 (Hold) company. It expects 2017 adjusted earnings per share in the band of $5.80 to $6.10, which includes $400 million of pre-tax currency headwinds. Foreign currency related headwinds are also expected to hurt 2017 results. The Zacks Consensus Estimate for 2017 currently stands at $6.14 per share. The earnings miss and the dismal outlook disappointed the investors. Consequently, shares of the company lost value in early trading.
Investors in the broader transportation space keenly await the fourth-quarter earnings reports of Spirit Airlines (SAVE - Free Report) and Alaska Air Group (ALK - Free Report) , slated for release Feb 7 and Feb 8, respectively.
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United Parcel (UPS) Lags Q4 Earnings & Sales; Stock Down
United Parcel Service, Inc. (UPS - Free Report) reported fourth-quarter 2016 earnings of $1.63 per share, missing the Zacks Consensus Estimate by 5 cents. Earnings increased 3.82% year over year.
Revenues improved 5.5% over the year-ago quarter to $16.93 billion, missing the Zacks Consensus Estimate of $16.96 billion. Results were hurt by the shift in product mix and weakness in industrial production.
Segmental Details
U.S. Domestic Package revenues climbed 6.3% year over year to $10.9 billion in the reported quarter. Segmental operating profit improved marginally to $1.3 billion.
Segmental average daily package volumes climbed 5% driven by a 5.4% rise in Ground products and 4.4% growth in Next Day Air services. Deferred Air products were up 2.8%. Average revenue per piece declined marginally.
International Package revenues improved 5% to $3.3 billion despite foreign currency movements hurting the top line. Export shipments improved 8.4% in the fourth quarter on the back of growth in Europe and Asia.
Segmental operating profits grew 13% in the quarter to $706 million. Revenue per piece declined 2.9%.
Supply Chain and Freight revenues increased 2.6% to $2.68 billion. Segmental results were aided by the acquisition of Coyote Logistics, which was completed in the third quarter of 2015. Operating profits in the segment declined to $179 million in the quarter under review.
United Parcel Service, Inc. Price, Consensus and EPS Surprise
United Parcel Service, Inc. Price, Consensus and EPS Surprise | United Parcel Service, Inc. Quote
Liquidity
United Parcel, which like its rival FedEx Corporation (FDX - Free Report) , had left no stone unturned to ensure a successful holiday season, generated free cash flow of $3.5 billion and spent $2.96 billion as capital expenditure in 2016. Moreover, United Parcel paid approximately $2.8 billion as dividend to shareholders in 2016. Additionally, it bought back 25.5 million shares for $2.7 billion. We are impressed with the company’s efforts to reward shareholders consistently through buybacks and dividend payouts.
Outlook
United Parcel is a Zacks Rank #3 (Hold) company. It expects 2017 adjusted earnings per share in the band of $5.80 to $6.10, which includes $400 million of pre-tax currency headwinds. Foreign currency related headwinds are also expected to hurt 2017 results. The Zacks Consensus Estimate for 2017 currently stands at $6.14 per share. The earnings miss and the dismal outlook disappointed the investors. Consequently, shares of the company lost value in early trading.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Important Releases Coming Up
Investors in the broader transportation space keenly await the fourth-quarter earnings reports of Spirit Airlines (SAVE - Free Report) and Alaska Air Group (ALK - Free Report) , slated for release Feb 7 and Feb 8, respectively.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>