It has been about a month since the last earnings report for United Parcel Service (UPS Quick QuoteUPS - Free Report) . Shares have added about 0.8% in that time frame, underperforming the S&P 500.

But investors have to be wondering, 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 its most recent earnings report in order to get a better handle on the important drivers.

Earnings Miss at UPS in Q2

Quarterly earnings per share of $1.55 missed the Zacks Consensus Estimate by a penny and declined 13.4% year over year. Revenues of $21.2 billion surpassed the Zacks Consensus Estimate of $20.8 billion but decreased 2.7% year over year.

Other Aspects of Q2 Earnings Report

U.S. Domestic Package revenues of $14.08 billion declined 0.8% year over year, owing to the expected decline in volume, partially offset by increases in air cargo and revenue per piece. The actual segmental sales figure was higher than our estimation of $13.86 billion. Segmental operating profit (adjusted) fell 1.4% year over year to $982 million. The adjusted operating margin for the segment was 7%.

Revenues in the International Package division totaled $4.48 billion, which increased 2.6% year over year, owing to a 3.9% increase in average daily volume. The actual segmental sales figure was higher than our estimation of $4.28 billion. Segmental operating profit (adjusted) totaled $682 million, down 17.2% year over year. The adjusted operating margin for the segment was 15.2%.

Supply Chain Solutions’ revenues of $2.65 billion decreased 18.3% year over year, owing to the impact of the third quarter of 2024 divestiture of Coyote. The actual segmental sales figure was below our estimation of $2.82 billion. Operating profit (on an adjusted basis) fell 13.1% year over year to $212 million. The adjusted operating margin for the segment was 8%.

The overall adjusted operating margin was 8.8%.

Outlook

Citing the current macroeconomic uncertainty, UPS did not unveil any revenue or operating profit guidance for 2025. UPS is affirming 2025 guidance for the following metrics.

Capital expenditures are estimated to be around $3.5 billion, with dividend payments expected to be around $5.5 billion (subject to board approval) and share repurchases of around $1.0 billion (which have been completed).

The effective tax rate is expected to be around 23.5%.

UPS expects to witness $3.5 billion in reductions in expenses due to its network reconfiguration and Efficiency Reimagined initiatives.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -15.64% due to these changes.

VGM Scores

Currently, UPS has a subpar Growth Score of D, a score with the same score on the momentum front. However, the stock has a score of B on the value side, putting it in the top 40% for value investors.

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. It's no surprise UPS has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.