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United Parcel Service (UPS) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

United Parcel Service (UPS) closed at $102.17 in the latest trading session, marking a -1.19% move from the prior day. This move lagged the S&P 500's daily loss of 0.13%. At the same time, the Dow lost 0.13%, and the tech-heavy Nasdaq lost 0.24%.

Coming into today, shares of the package delivery service had gained 7.52% in the past month. In that same time, the Transportation sector gained 1.42%, while the S&P 500 gained 4.13%.

Investors will be hoping for strength from UPS as it approaches its next earnings release. The company is expected to report EPS of $1.93, down 0.52% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $17.94 billion, up 2.77% from the year-ago period.

UPS's full-year Zacks Consensus Estimates are calling for earnings of $7.46 per share and revenue of $74.46 billion. These results would represent year-over-year changes of +3.04% and +3.62%, respectively.

Investors might also notice recent changes to analyst estimates for UPS. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.1% lower. UPS is currently sporting a Zacks Rank of #4 (Sell).

In terms of valuation, UPS is currently trading at a Forward P/E ratio of 13.85. Its industry sports an average Forward P/E of 12, so we one might conclude that UPS is trading at a premium comparatively.

It is also worth noting that UPS currently has a PEG ratio of 1.59. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. UPS's industry had an average PEG ratio of 1.21 as of yesterday's close.

The Transportation - Air Freight and Cargo industry is part of the Transportation sector. This industry currently has a Zacks Industry Rank of 180, which puts it in the bottom 30% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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