Why Is UPS (UPS) Down 0.5% Since Last Earnings Report?
It has been about a month since the last earnings report for United Parcel Service (UPS). Shares have lost about 0.5% 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 the most recent earnings report in order to get a better handle on the important drivers.
Earnings Miss at UPS in Q2
Quarterly earnings of $1.79 per share missed the Zacks Consensus Estimate of $1.98 and declined 29.5% year over year. Revenues of $21.82 billion fell short of the Zacks Consensus Estimate of $22.31 billion and decreased 1.1% year over year.
The overall adjusted operating profit fell 29.3% year over year. The overall adjusted operating margin was 9.5%. UPS generated $1.99 billion of net cash from operating activities in the second quarter of 2024. Capital expenditures were $933 million. Free cash flow was $1.085 billion.
U.S. Domestic Package revenues decreased 1.9% year over year to $14.12 billion, owing to a 2.6% decrease in revenue per piece due primarily to changes in product mix. Segmental operating profit (adjusted) plunged 40.6% year over year to $997 million. The adjusted operating margin for the segment was 7.1%.
Revenues in the International Package division summed $4.370 billion, down 1% year over year owing to a 2.9% decrease in average daily volume. Segmental operating profit (adjusted) totaled $824 million, down 8.6% year over year. The adjusted operating margin for the segment was 18.9%.
Supply Chain Solutions revenues of $3.329 billion increased 2.6% year over year owing to growth in logistics, including healthcare. Operating profit (on an adjusted basis) tumbled 27.7% to $226 million. The adjusted operating margin for the segment was 7.3%.
Outlook
For 2024, UPS now anticipates revenues to be around $93.0 billion (prior view: $92-$94.5 billion). For 2024, UPS now expects the consolidated adjusted operating margin to be around 9.4% compared with the prior expectation of 10%-10.6%.
Capital expenditures are now anticipated to be around $4 billion (prior view: $4.5 billion).
For 2024, UPS aims to repurchase shares worth $500 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -20.92% due to these changes.
VGM Scores
At this time, UPS has an average Growth Score of C, 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 C. 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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United Parcel Service, Inc. (UPS) : Free Stock Analysis Report