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UPS Q2 Earnings Beat, Up Y/Y on Robust Rise in Volumes

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United Parcel Service’s (UPS - Free Report) shares rose in early trading following better-than-expected second-quarter 2020 results. The company’s earnings (excluding 10 cents from non-recurring items) per share of $2.13 surpassed the Zacks Consensus Estimate of $1.04. The bottom line also improved 8.7% year over year. Results were aided by expanded residential delivery volumes, thanks to coronavirus confining people to their homes, increase in healthcare shipments and strong outbound demand from Asia.

UPS generated revenues worth $20,459 million in the quarter, outperforming the Zacks Consensus Estimate of $17,344.4 million. Moreover, the top line improved 13.4% on a year-over-year basis. Results were aided by 20.9% growth in average daily volumes. Also, operating profit climbed 7.4% on an adjusted basis in the second quarter towing to a robust rise inInternational Package segment’s operating profit.

Segmental Details

U.S. Domestic Package revenues ascended 17.3% year over year to $13,074 million in the second quarter, driven by a 22.8% rise in average daily volumes. Demand for residential delivery soared, leading to a 65.2% jump in business-to-consumer shipments. Segmental operating profit (adjusted) dipped marginally to $1,215 million in the quarter.

Revenues at the International Package division came in at $3,705 million, up 5.7%. Average daily volumes rose 9.8% owing to strong outbound demand from Asia and increased cross-border e-commerce in Europe.Segmental operating profit (adjusted) totaled $842 million in the reported quarter, up 26.6%.

Supply Chain and Freight revenues climbed 8.5% to $3,680 million owing to higher demand for air freight forwarding from Asia. Operating profits (on an adjusted basis), however, dipped 2.2% to $158 million in the second quarter.

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

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

United Parcel Service, Inc. price-consensus-eps-surprise-chart | United Parcel Service, Inc. Quote

Other Details

Cash from operations were $5.9 billion at the end of the reported quarter. UPS, currently carrying a Zacks Rank #3 (Hold), generated free cash flow of $3.9 billion on an adjusted basis in the same period. The company’scapital expenditures (adjusted) were $2,098 million at the end of the second quarter.

Sectorial Snapshot

Let’s take a look into some other Zacks Transportation sector companies’ second-quarter earnings results.

Canadian National’s (CNI - Free Report) second-quarter earnings (excluding 36 cents from non-recurring items) of 92 cents per share (C$0.77) were in line with the Zacks Consensus Estimate. However, the bottom line declined 28.7% year over year. Quarterly revenues of $2,315 million (C$3,209 million) missed the Zacks Consensus Estimate of $2,407.6 million and also fell 21.8% year over year. This company carries a Zacks Rank #2 (Buy) at present.  You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

J.B. Hunt Transport (JBHT - Free Report) , presently carrying a Zacks Rank of 3, reported second-quarter earnings of $1.14 per share that surpassed the Zacks Consensus Estimate by 31 cents. Total revenues of $2,145.6 million also beat the Zacks Consensus Estimate of $2,060.9 million.

Kansas City Southern’s (KSU - Free Report) second-quarter earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. This currently Zacks #3 Ranked company’s total revenues of $547.9 million lagged the consensus mark of $550.2 million.

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