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UPS (UPS) Down 9.5% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for United Parcel Service (UPS - Free Report) . Shares have lost about 9.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is UPS due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at UPS in Q2
UPS reported second-quarter 2023 earnings per share of $2.54 which beat the Zacks Consensus Estimate of $2.51 but declined 22.8% year over year. Revenues of $22,055 million fell short of the Zacks Consensus Estimate of $22,879.7 million but decreased 10.9% year over year. The overall adjusted operating profit fell 18.4% year over year to $2,919 million in the second quarter.
Segmental Details
U.S. Domestic Package revenues decreased 6.9% year over year to $14,396 million in the second quarter, driven by a 9.9% decrease in average daily volume, partially offset by a 3.3% increase in revenue per piece. Segmental operating profit (adjusted) fell 9.4% year over year to $1,681 million in the reported quarter. The adjusted operating margin for the segment was 11.7% in the second quarter.
Revenues at the International Package division summed $4,415 million, down 13% year over year. The downfall was due to a 6.6% reduction in average daily volume and continued softness on Asia trade lanes. Segmental operating profit (adjusted) totaled $902 million in the reported quarter, down 25% year over year. The adjusted operating margin for the segment was 20.4% in the second quarter.
Supply Chain and Freight revenues of $3,244 million fell 23.4% year over year due to market rate and volume declines in forwarding, partially offset by growth in logistics, including healthcare. Operating profit (on an adjusted basis) fell 35% to $336 million in the second quarter. The adjusted operating margin for the segment was 10.4% in the second quarter.
2023 Outlook
For 2023, UPS now anticipates revenues to be around $93 billion (prior view: $97 billion). The consolidated adjusted operating margin is now expected to be around 11.8% (prior view: 12.8%).
Capital expenditures are still anticipated to be around $5.3 billion. Further, UPS anticipates dividend payments of $5.4 billion and share repurchases of $3 billion for the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -15.99% due to these changes.
VGM Scores
At this time, UPS has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise UPS has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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UPS (UPS) Down 9.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for United Parcel Service (UPS - Free Report) . Shares have lost about 9.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is UPS due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at UPS in Q2
UPS reported second-quarter 2023 earnings per share of $2.54 which beat the Zacks Consensus Estimate of $2.51 but declined 22.8% year over year. Revenues of $22,055 million fell short of the Zacks Consensus Estimate of $22,879.7 million but decreased 10.9% year over year. The overall adjusted operating profit fell 18.4% year over year to $2,919 million in the second quarter.
Segmental Details
U.S. Domestic Package revenues decreased 6.9% year over year to $14,396 million in the second quarter, driven by a 9.9% decrease in average daily volume, partially offset by a 3.3% increase in revenue per piece. Segmental operating profit (adjusted) fell 9.4% year over year to $1,681 million in the reported quarter. The adjusted operating margin for the segment was 11.7% in the second quarter.
Revenues at the International Package division summed $4,415 million, down 13% year over year. The downfall was due to a 6.6% reduction in average daily volume and continued softness on Asia trade lanes. Segmental operating profit (adjusted) totaled $902 million in the reported quarter, down 25% year over year. The adjusted operating margin for the segment was 20.4% in the second quarter.
Supply Chain and Freight revenues of $3,244 million fell 23.4% year over year due to market rate and volume declines in forwarding, partially offset by growth in logistics, including healthcare. Operating profit (on an adjusted basis) fell 35% to $336 million in the second quarter. The adjusted operating margin for the segment was 10.4% in the second quarter.
2023 Outlook
For 2023, UPS now anticipates revenues to be around $93 billion (prior view: $97 billion). The consolidated adjusted operating margin is now expected to be around 11.8% (prior view: 12.8%).
Capital expenditures are still anticipated to be around $5.3 billion. Further, UPS anticipates dividend payments of $5.4 billion and share repurchases of $3 billion for the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -15.99% due to these changes.
VGM Scores
At this time, UPS has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise UPS has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.