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UBER Rides on Delivery Business Amid a Rise in Expenses

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Uber Technologies, Inc. (UBER - Free Report) is benefiting from the improvement in Delivery operations and recovery in Mobility operations.

The company recently incurred a loss of $1.33 per share in the second quarter of 2022, wider than the Zacks Consensus Estimate of a loss of 25 cents. In second-quarter 2021, Uber reported earnings of 58 cents per share.

Total revenues of $8,073 million also outperformed the Zacks Consensus Estimate of $7,434.5 million. The top line jumped more than 100% year over year, backed by contribution from the acquisition of Transplace by Uber Freight and change in the business model for the company’s UK Mobility business.

How is Uber Technologies Doing?

Uber’s efforts to expand its Delivery operations in response to the surge in business are encouraging.Uber’s Delivery business is witnessing a boom with online order volumes surging amid the pandemic. Revenues from the segment increased 37% year over year in the second quarter of 2022, while gross bookings from the unit augmented 7%.

Continued recovery in the Mobility business is an added positive. With increased vaccinations in the United States and some other key markets, the company sees continued improvement in demand for Mobility. Mobility revenues jumped more than 100% year over year in second-quarter 2022 as ride volumes continued to rebound, while gross bookings from the unit improved 55%. For the third quarter, Uber expects gross bookings of $29 billion-$30 billion.

With a focus on financial discipline, recovery in Mobility operations and improvement in Delivery adjusted EBITDA, betterment in Uber’s adjusted EBITDA is encouraging. The company generated adjusted EBITDA of $364 million in the second quarter of 2022 against adjusted EBITDA loss of $509 million in the year-ago period. For the third quarter, adjusted EBITDA is estimated to be $440 million-$470 million.

However, rise in total costs and expenses poses a threat to Uber’s bottom line. Total costs and expenses surged 68.9% year over year in the first half of 2022, with sales and marketing expenses rising 5.2% and the cost of revenues augmenting more than 100%.

Zacks Rank and Stocks to Consider

Currently, Uber Technologies carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Transportation sector that investors can consider are GATX Corporation (GATX - Free Report) , Triton International Limited (TRTN - Free Report) and Teekay Tankers Ltd. (TNK - Free Report) , each carrying a Zacks Rank #2 (Buy) as well.

GATX Corporation has an expected earnings growth rate of 17.8% for the current year. GATX delivered a trailing four-quarter earnings surprise of 28.9%, on average.

The Zacks Consensus Estimate for GATX’s current-year earnings has improved 2.1% over the past 90 days. Shares of GATX have gained 7.9% over the past year.

Triton has an expected earnings growth rate of 22.4% for the current year. TRTN delivered a trailing four-quarter earnings surprise of 7.5%, on average. TRTN has a long-term expected growth rate of 10%.

The Zacks Consensus Estimate for TRTN’s current-year earnings has improved 4.2% over the past 90 days. Shares of TRTN have increased 20.9% over the past year.

Teekay Tankers has an expected earnings growth rate of 140.1% for the current year. TNK delivered a trailing four-quarter earnings surprise of 46.1%, on average. TNK has a long-term expected growth rate of 3%.

The Zacks Consensus Estimate for TNK’s current-year earnings has improved more than 100% over the past 90 days. Shares of TNK have soared 120.3% over the past year.

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