Yahoo Finance Why Is UPS (UPS) Down 2.8% Since Last Earnings Report?
A month has gone by since the last earnings report for United Parcel Service (UPS). Shares have lost about 2.8% 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 catalysts.
Earnings Beat at UPS in Q1
Quarterly earnings of $2.20 per share beat the Zacks Consensus Estimate by a penny but declined 27.9% year over year. Revenues of $22,925 million fell short of the Zacks Consensus Estimate of $22,935.2 million and decreased 5.9% year over year. The overall adjusted operating profit fell 22.8% year over year to $2,552 million in the first quarter.
UPS generated $2,357 million of cash from operating activities in the first quarter. Capital expenditures came in at $609 million. Free cash flow was $1,770 million.
Segmental Details
U.S. Domestic Package revenues decreased 0.9% year over year to $14,987 million in the first quarter, driven by a 5.4% decrease in average daily volume, nearly offset by a 4.8% increase in revenue per piece. Segmental operating profit (adjusted) fell 12.7% year over year to $1,488 million in the quarter. The adjusted operating margin for the segment was 9.9% in the first quarter.
Revenues at the International Package division summed $4,543 million, down 6.8% year over year. The downfall was due to a 6.2% reduction in average daily volume due to lower domestic volume and softness in China’s trade lanes. Segmental operating profit (adjusted) totaled $806 million in the reported quarter, down 28% year over year. The adjusted operating margin for the segment was 17.7% in the first quarter.
Supply Chain and Freight revenues of $3,395 million fell 22.5% year over year due to market rate and volume declines in forwarding, partially offset by growth in UPS’ healthcare business. Operating profit (on an adjusted basis) fell 46.4% to $258 million in the first quarter. The adjusted operating margin for the segment was 7.6% in the first quarter.
2023 Outlook
UPS now anticipates revenues to be around $97 billion (prior view: $97-$99.4 billion). The consolidated adjusted operating margin is now expected to be around 12.8% (prior view: between 12.8% and 13.6%).
Capital expenditures are still anticipated to be around $5.3 billion. Further, UPS anticipates paying dividend payments of $5.4 billion and share repurchases to be $3 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -5.19% due to these changes.
VGM Scores
At this time, UPS has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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. 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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United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
