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UPS (UPS) Down 1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for United Parcel Service (UPS - Free Report) . Shares have lost about 1% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at UPS in Q4
United Parcel Service reported mixed fourth-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Quarterly earnings of $3.62 per share beat the Zacks Consensus Estimate of $3.58 and improved 0.8% year over year. Revenues of $27,033 million fell short of the Zacks Consensus Estimate of $27,946.6 million and decreased 2.7% year over year.
The overall adjusted operating profit fell 3.3% year over year to $3,822 million in the fourth quarter.
UPS generated $3,332 million of cash from operating activities in the fourth quarter. Capital expenditure was $2,491 million. Free cash flow was $566 million.
Segmental Details
U.S. Domestic Package revenues increased 3.1% year over year to $18,252 million in the fourth quarter, driven by a 7.2% increase in revenue per piece. Segmental operating profit (adjusted) jumped 7.5% year over year to $2,328 million in the quarter. The adjusted operating margin for the segment was 12.8% in the fourth quarter.
Revenues at the International Package division summed $4,950 million, down 8.3% year over year. The downfall was due to an 8.6% reduction in average daily volume (owing to lower domestic volume and softness in China trade lanes). Segmental operating profit (adjusted) totaled $1,091 million in the reported quarter, down 18% year over year. The adjusted operating margin for the segment was 22% in the fourth quarter.
Supply Chain and Freight revenues declined 18.1% to $3,831 million due to volume and market rate declines in air and ocean freight forwarding, partially offset by growth in the company’s healthcare business. Operating profit (on an adjusted basis) fell 11.6% to $403 million in the fourth quarter. The adjusted operating margin for the segment was 10.5% in the fourth quarter.
Shareholder-Friendly Move
UPS’ board of directors has raised its quarterly cash dividend to $1.62 per share, effective from the first quarter of 2023. This marks the 14th consecutive year of a dividend increase. The raised dividend will be paid out on Mar 10, 2023, to all its shareholders of record as of Feb 21, 2023.
Additionally, UPS has approved a $5-billion share repurchase authorization, replacing the company’s existing authorization.
2023 Outlook
For 2023, United Parcel anticipates revenues between $97.0 billion and $99.4 billion. The consolidated adjusted operating margin is expected to be between 12.8% and 13.6%. Capital expenditure is anticipated to be $5.3 billion. UPS expects making dividend payments of $5.4 billion and share repurchases of $3 billion. The effective tax rate is likely to be 23.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -20.03% due to these changes.
VGM Scores
At this time, UPS has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UPS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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UPS (UPS) Down 1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for United Parcel Service (UPS - Free Report) . Shares have lost about 1% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at UPS in Q4
United Parcel Service reported mixed fourth-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Quarterly earnings of $3.62 per share beat the Zacks Consensus Estimate of $3.58 and improved 0.8% year over year. Revenues of $27,033 million fell short of the Zacks Consensus Estimate of $27,946.6 million and decreased 2.7% year over year.
The overall adjusted operating profit fell 3.3% year over year to $3,822 million in the fourth quarter.
UPS generated $3,332 million of cash from operating activities in the fourth quarter. Capital expenditure was $2,491 million. Free cash flow was $566 million.
Segmental Details
U.S. Domestic Package revenues increased 3.1% year over year to $18,252 million in the fourth quarter, driven by a 7.2% increase in revenue per piece. Segmental operating profit (adjusted) jumped 7.5% year over year to $2,328 million in the quarter. The adjusted operating margin for the segment was 12.8% in the fourth quarter.
Revenues at the International Package division summed $4,950 million, down 8.3% year over year. The downfall was due to an 8.6% reduction in average daily volume (owing to lower domestic volume and softness in China trade lanes). Segmental operating profit (adjusted) totaled $1,091 million in the reported quarter, down 18% year over year. The adjusted operating margin for the segment was 22% in the fourth quarter.
Supply Chain and Freight revenues declined 18.1% to $3,831 million due to volume and market rate declines in air and ocean freight forwarding, partially offset by growth in the company’s healthcare business. Operating profit (on an adjusted basis) fell 11.6% to $403 million in the fourth quarter. The adjusted operating margin for the segment was 10.5% in the fourth quarter.
Shareholder-Friendly Move
UPS’ board of directors has raised its quarterly cash dividend to $1.62 per share, effective from the first quarter of 2023. This marks the 14th consecutive year of a dividend increase. The raised dividend will be paid out on Mar 10, 2023, to all its shareholders of record as of Feb 21, 2023.
Additionally, UPS has approved a $5-billion share repurchase authorization, replacing the company’s existing authorization.
2023 Outlook
For 2023, United Parcel anticipates revenues between $97.0 billion and $99.4 billion. The consolidated adjusted operating margin is expected to be between 12.8% and 13.6%. Capital expenditure is anticipated to be $5.3 billion. UPS expects making dividend payments of $5.4 billion and share repurchases of $3 billion. The effective tax rate is likely to be 23.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -20.03% due to these changes.
VGM Scores
At this time, UPS has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UPS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.