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UPS (UPS) Up 2.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for United Parcel Service (UPS - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is UPS due for a pullback? 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.
Second - Quarter Results
UPS reported second-quarter 2018 earnings (excluding 23 cents from non-recurring items) of $1.94 per share, surpassing the Zacks Consensus Estimate of $1.92. Earnings increased 22.8% on a year-over-year basis. Results were aided by higher revenues.
Revenues improved significantly year over year to $17,456 million and outpaced the Zacks Consensus Estimate of $17,303.7 million. This upside was driven by strong demand for UPS solutions among other factors.
Segmental Details
U.S. Domestic Package revenues climbed 6.3% year over year to $10,354 million in the second quarter, owing to improved e-commerce demand and the 3.6% increase in revenue per piece. On the contrary, segmental operating profit (adjusted) declined more than 9% to $1,135 million.
Segmental average daily package volumes expanded 2.6%, backed by a 3.1%, and 2% rise in Ground products and Next Day Air services. The metric declined 2.2% at the Deferred Air products sub-group.
International Package revenues improved 14% to $3,602 million. Daily export volumes rose 9.5% in the quarter under review on the back of strong growth in the United States and Europe. Segmental operating profit (adjusted) increased 15% to $654 million.
Supply Chain and Freight revenues grew 16% to $3,500 million. Operating profits in the segment increased 17% to $247 million in the second quarter. Segmental results were boosted by impressive growth strategies as well as structural cost reductions.
Other Details
The company’s capital expenditure was $2.8 billion in the first half of the year. Free cash flow increased to $4.4 billion in the first half of the year due to initiatives that led to improvement in working capital. UPS is also focussing on rewarding shareholders through dividends and buybacks.
Outlook
The company expects 2018 adjusted earnings per share between $7.03 and $7.37. Free cash flow is expected at $5 billion. Capital expenditure is projected between $6.5 billion and $7 billion for 2018. Effective tax rate is expected between 23% and 24% for the remainder of the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, UPS has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, UPS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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UPS (UPS) Up 2.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for United Parcel Service (UPS - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is UPS due for a pullback? 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.
Second - Quarter Results
UPS reported second-quarter 2018 earnings (excluding 23 cents from non-recurring items) of $1.94 per share, surpassing the Zacks Consensus Estimate of $1.92. Earnings increased 22.8% on a year-over-year basis. Results were aided by higher revenues.
Revenues improved significantly year over year to $17,456 million and outpaced the Zacks Consensus Estimate of $17,303.7 million. This upside was driven by strong demand for UPS solutions among other factors.
Segmental Details
U.S. Domestic Package revenues climbed 6.3% year over year to $10,354 million in the second quarter, owing to improved e-commerce demand and the 3.6% increase in revenue per piece. On the contrary, segmental operating profit (adjusted) declined more than 9% to $1,135 million.
Segmental average daily package volumes expanded 2.6%, backed by a 3.1%, and 2% rise in Ground products and Next Day Air services. The metric declined 2.2% at the Deferred Air products sub-group.
International Package revenues improved 14% to $3,602 million. Daily export volumes rose 9.5% in the quarter under review on the back of strong growth in the United States and Europe. Segmental operating profit (adjusted) increased 15% to $654 million.
Supply Chain and Freight revenues grew 16% to $3,500 million. Operating profits in the segment increased 17% to $247 million in the second quarter. Segmental results were boosted by impressive growth strategies as well as structural cost reductions.
Other Details
The company’s capital expenditure was $2.8 billion in the first half of the year. Free cash flow increased to $4.4 billion in the first half of the year due to initiatives that led to improvement in working capital. UPS is also focussing on rewarding shareholders through dividends and buybacks.
Outlook
The company expects 2018 adjusted earnings per share between $7.03 and $7.37. Free cash flow is expected at $5 billion. Capital expenditure is projected between $6.5 billion and $7 billion for 2018. Effective tax rate is expected between 23% and 24% for the remainder of the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, UPS has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, UPS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.