A month has gone by since the last earnings report for United Parcel Service (UPS Quick QuoteUPS - Free Report) . Shares have lost about 1.8% 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 Q3

United Parcel Service reported third-quarter 2021 earnings (excluding 6 cents from non-recurring items) of $2.71 per share, beating the Zacks Consensus Estimate of $2.52. The bottom line jumped 18.9% year over year with strong performances across all segments.

Quarterly revenues of $23,184 million also outperformed the Zacks Consensus Estimate of $22,612.2 million. The top line increased 9.2% year over year, driven by upbeat demand for e-commerce-related package deliveries. Overall operating profit rose 23.4% year over year to $2,970 million in the third quarter, boosted by double-digit growth in the adjusted operating profit across all segments.

In the first nine months of 2021, UPS generated free cash flow of $9,265 million, up 52.3% from the comparable period’s figure in 2020. The company’s capital expenditures were $2,570 million at the end of the same period.

Segmental Details for Q3

U.S. Domestic Package revenues increased 7.4% year over year to $14,208 million. Segmental operating profit (adjusted) jumped 24.8% year over year to $1,414 million in the quarter. Revenue per piece increased 12%. Adjusted operating margin in the September quarter was 10%.

Revenues at the International Package division summed $4,270 million, up 15.5%. The segment’s performance was driven by strong growth in all regions. Segmental operating profit (adjusted) totaled $1,108 million in the reported quarter, up 14%. Adjusted operating margin was 23.5%.

Supply Chain and Freight revenues augmented 8.4% to $4,256 million, aided primarily by the upbeat performance of Forwarding and Logistics businesses. Operating profit (on an adjusted basis) soared 48.3% to $448 million in the September quarter.

Upbeat 2021 Outlook

UPS raised its 2021 outlook for certain key metrics. The company now anticipates consolidated operating margin to be approximately 13% (earlier guidance:12.7%) in the current year. Return on invested capital is now expected to be approximately 29% from 28% expected previously. Capital expenditures are now estimated to be $4.2 billion (earlier guidance: $4 billion) in 2021. The company expects an effective tax rate of 22.5%.Free cash flow is expected to be around $10.5 billion in 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 7.23% due to these changes.

VGM Scores

Currently, UPS has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 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. Notably, UPS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.