Why is UPS (UPS) down 1.9% since its last earnings report?

About a month has passed since United Parcel Service (UPS) last reported earnings. Shares have lost about 1.9% in that time, 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 the most recent earnings report in order to better understand the important catalysts.

Good results for UPS in the first quarter

United Parcel Service’s first-quarter 2024 earnings per share of $1.43 beat the Zacks Consensus Estimate of $1.33, but declined 35% year-over-year. Revenues of $21,706 million missed the Zacks Consensus Estimate of $21,960.6 million and declined 5.3% year over year.

In the first quarter, UPS generated $3.31 billion in net cash from operations. Capital expenditures amounted to $1.03 billion. Free cash flow was $2.28 billion

U.S. domestic shipping revenue declined 5% year-over-year to $14.23 billion, driven by a 3.2% decline in average daily volume. The actual amount was lower than our estimate of $14,595 million. Segment operating profit (adjusted) declined 43.6% year-over-year to $839 million. The segment’s adjusted operating margin was 5.9%.

International shipments revenue was $4.26 billion, down 6.3% year-over-year. The decline was due to a 5.8% decline in average daily volume. Segment operating profit (adjusted) was $682 million, down 15.4% year over year. The segment’s adjusted operating margin was 16%.

Supply Chain Solutions’ revenue of $3.22 billion declined 5.3% year-over-year due to declines in shipping market rates. Operating profit (adjusted) fell 12.4% to $226 million. The segment’s adjusted operating margin was 7%.

Outlook for 2024

UPS continues to forecast 2024 revenue in the range of $92 billion to $94.5 billion and consolidated adjusted operating margin of 10% to 10.6%. Capital expenditures are still estimated at approximately $4.5 billion.

How have estimates changed since then?

It turns out that the estimate review has been trending downward over the past month.

VGM results

Currently, UPS has a solid Growth Score of B, although well behind its Momentum Score of F. However, the stock is rated a B on the value side, placing it in the top 40% of the investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, UPS carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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United Parcel Service, Inc. (UPS): Free Inventory Analysis Report

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