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UPS Q2 Earnings & Revenues Surpass Estimates, Increase Y/Y

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United Parcel Service, Inc. (UPS - Free Report)    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.

United Parcel Service, Inc. Price, Consensus and EPS Surprise

 

United Parcel Service, Inc. Price, Consensus and EPS Surprise | United Parcel Service, Inc. Quote

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 package delivery company expects 2018 adjusted earnings per share between $7.03 and $7.37. Free cash flow is expected at $5 billion. The Zacks Consensus Estimate for 2018 currently stands at $7.24 per share. Capital expenditure between $6.5 billion and $7 billion in 2018. Effective tax rate is expected between 23% and 24% for the remainder of the year.

Zacks Rank & Other Key Picks

UPS carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader Transportation sector include CSX Corp. (CSX - Free Report) , GATX Corp. (GATX - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) . While CSX sports a Zacks Rank #1 (Strong Buy), GATX and Expeditors hold a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Each of the companies flaunts an impressive earnings history, having surpassed the Zacks Consensus Estimate in three of the past four quarters.

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