Back to top

Image: Bigstock

UPS Surpasses Q4 Earnings Estimates, Announces Dividend Hike

Read MoreHide Full Article

United Parcel Service, Inc. (UPS - Free Report) fourth-quarter 2023 earnings per share of $2.47 beat the Zacks Consensus Estimate of $2.44 but declined 31.7% year over year. Revenues of $24.91 billion fell short of the Zacks Consensus Estimate of $25.30 billion and decreased 7.8% year over year.

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

UPS generated $10.23 billion of net cash from operating activities in 2023. Capital expenditures were $5.15 billion. Free cash flow was $5.25 billion. The overall adjusted operating profit fell 27.1% year over year to $2.78 billion.

U.S. Domestic Package revenues decreased 7.3% year over year to $16.91 billion, caused by an 7.4% dip in average daily volume. The actual figure was lower than our estimate of $17.07 billion. Segmental operating profit (adjusted) plunged 32.6% year over year to $1.56 billion. The adjusted operating margin for the segment was 9.3%.

Revenues at the International Package division summed $4.60 billion, down 6.9% year over year. The downfall was due to 8.3% reduction in average daily volume mainly due to softness in Europe. The actual figure was lower than our estimate of $4.78 billion. Segmental operating profit (adjusted) totaled $899 million, down 17.6% year over year. The adjusted operating margin for the segment was 19.5%.

Supply Chain Solutions revenues of $3.39 billion fell 11.4% year over year due to market rate declines and excess market capacity in forwarding.The actual figure was lower than our estimate of $3.50 billion. Operating profit (on an adjusted basis) tumbled 20.8% to $319 million. The adjusted operating margin for the segment was 9.4%.

Dividend Hike

UPS’ board of directors approved a dividend increase of $0.01 in its quarterly dividend payment. UPS will pay a first-quarter 2024 dividend of $1.63 per share on all outstanding Class A and Class B shares. The dividend will be paid on Mar 8, 2024 to shareowners of record on Feb 20.

This hike marks the 15th consecutive year of dividend increase by UPS.

2024 Outlook

For 2024, UPS anticipates revenues in the range of $92-$94.5 billion and consolidated adjusted operating margin to lie between 10% and 10.6%.

Capital expenditures are anticipated to be around $4.5 billion. Further, UPS anticipates dividend payments of $5.4 billion, subject to board approval. Effective tax rate is projected to be roughly 23.5%.

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

Performances of Other Transportation Companies

J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) fourth-quarter 2023 EPS of $1.47 missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.

JBHT’s total operating revenues of $3,303.70 million surpassed the Zacks Consensus Estimate of $3,236.2 million but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenue, fell 6% year over year.

Delta Air Lines (DAL - Free Report) has reported fourth-quarter 2023 EPS (excluding $1.88 from non-recurring items) of $1.28, which comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.51% on a year-over-year basis due to high labor costs.

Revenues of $14,223 million surpassed the Zacks Consensus Estimate of $14,069.5 million and increased 5.87% on a year-over-year basis, driven by strong holiday-air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $13,661 million, up 11% year over year.

United Airlines Holdings, Inc. (UAL - Free Report) reported fourth-quarter 2023 EPS (excluding 19 cents from non-recurring items) of $2.00, which outpaced the Zacks Consensus Estimate of $1.61 but declined 18.7% year over year.

Operating revenues of $13,626 million beat the Zacks Consensus Estimate of $13,546.8 million. The top line increased 9.9% year over year due to upbeat air-travel demand. This was driven by a 10.9% rise in passenger revenues (accounting for 91.1% of the top line) to $12,421 million. Almost 41,779 passengers traveled on UAL flights in the fourth quarter.

Published in