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UPS (UPS) Up 7.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for United Parcel Service (UPS - Free Report) . Shares have added about 7.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at UPS in Q1
UPS' earnings (excluding $2.70 from non-recurring items) per share of $2.77 surpassed the Zacks Consensus Estimate of $1.67. The bottom line also surged in excess of 100% year over year. Results were aided by an expanded volume of deliveries with the coronavirus pandemic continuing to confine people to their homes.
Driven by inflated volumes, quarterly revenues at UPS climbed 27% year over year to $22,908 million, surpassing the Zacks Consensus Estimate of $20,379.7 million. Notably, consolidated average daily volumes jumped 14.3% year over year. Also, overall operating profit skyrocketed more than 100% on an adjusted basis in the first quarter, boosted by double-digit growth in adjusted operating profit across all segments.
During the March quarter, UPS generated free cash flow of $3,712 million. The company’s capital expenditures were $834 million in the reported quarter
Segmental Details
U.S. Domestic Package revenues increased 22.3% year over year to $14,010 million in the first quarter, driven by growth from small and medium-sized businesses. Revenue per piece ascended 10.2%, driven by Ground products. Segmental operating profit (adjusted) expanded more than 100% to $1,462 million in the quarter. Adjusted operating margin in the March quarter was 10.4%.
Revenues at the International Package division summed $4,607 million, up 36.2% on the back of strong demand from Asia and Europe. Average daily volumes rose 23.1%, led by export growth from all regions. Segmental operating profit (adjusted) totaled $1,091 million in the reported quarter, up 95.6%.
Supply Chain and Freight revenues jumped 34.3% to $4,291 million, aided by demand strength in all businesses. Operating profits (on an adjusted basis) soared more than 100% to $395 million in the March quarter.
Outlook
Due to the coronavirus-led uncertainty, the company did not provide a 2021 guidance for either revenues or earnings per share. However, the previously announced current-year projection for capital allocation was retained by UPS. Capital expenditures are expected at around $4 billion. Effective tax rate is predicted to be 23.5%. Moreover, UPS has no plans to buy back shares in 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 19.41% due to these changes.
VGM Scores
At this time, UPS has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise UPS has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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UPS (UPS) Up 7.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for United Parcel Service (UPS - Free Report) . Shares have added about 7.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at UPS in Q1
UPS' earnings (excluding $2.70 from non-recurring items) per share of $2.77 surpassed the Zacks Consensus Estimate of $1.67. The bottom line also surged in excess of 100% year over year. Results were aided by an expanded volume of deliveries with the coronavirus pandemic continuing to confine people to their homes.
Driven by inflated volumes, quarterly revenues at UPS climbed 27% year over year to $22,908 million, surpassing the Zacks Consensus Estimate of $20,379.7 million. Notably, consolidated average daily volumes jumped 14.3% year over year. Also, overall operating profit skyrocketed more than 100% on an adjusted basis in the first quarter, boosted by double-digit growth in adjusted operating profit across all segments.
During the March quarter, UPS generated free cash flow of $3,712 million. The company’s capital expenditures were $834 million in the reported quarter
Segmental Details
U.S. Domestic Package revenues increased 22.3% year over year to $14,010 million in the first quarter, driven by growth from small and medium-sized businesses. Revenue per piece ascended 10.2%, driven by Ground products. Segmental operating profit (adjusted) expanded more than 100% to $1,462 million in the quarter. Adjusted operating margin in the March quarter was 10.4%.
Revenues at the International Package division summed $4,607 million, up 36.2% on the back of strong demand from Asia and Europe. Average daily volumes rose 23.1%, led by export growth from all regions. Segmental operating profit (adjusted) totaled $1,091 million in the reported quarter, up 95.6%.
Supply Chain and Freight revenues jumped 34.3% to $4,291 million, aided by demand strength in all businesses. Operating profits (on an adjusted basis) soared more than 100% to $395 million in the March quarter.
Outlook
Due to the coronavirus-led uncertainty, the company did not provide a 2021 guidance for either revenues or earnings per share. However, the previously announced current-year projection for capital allocation was retained by UPS. Capital expenditures are expected at around $4 billion. Effective tax rate is predicted to be 23.5%. Moreover, UPS has no plans to buy back shares in 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 19.41% due to these changes.
VGM Scores
At this time, UPS has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise UPS has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.