United Parcel Service’s UPS first-quarter 2020 earnings (excluding 4 cents from non-recurring items) per share of $1.15 lagged the Zacks Consensus Estimate by 6 cents. The bottom line also decreased 17.3% year over year. Results were hurt by the coronavirus-induced supply-chain disruptions.
Due to the uncertainty over the coronavirus pandemic, UPS withdrew its previously-issued 2020 projections for revenues and earnings per share. With dividends remaining a top priority for the company, it is suspending share buybacks for the current year. Moreover, capital expenditures for 2020 are expected to be reduced by roughly $1 billion from the previous projection. The earnings miss and the suspension of most 2020 estimates disappointed investors. Consequently, the stock lost value in early trading.
However, performance on the top-line front was encouraging despite the coronavirus woes. UPS generated revenues worth $18,035 million in the quarter, surpassing the Zacks Consensus Estimate of $17,420.3 million. Moreover, the top line improved 5.1% on a year-over-year basis. Results were aided by higher average daily volumes. However, operating profit decreased 26.4% on an adjusted basis in the first quarter due to the domestic package segment’s disappointing operating profit.
United Parcel Service, Inc. Price, Consensus and EPS Surprise
United Parcel Service, Inc. price-consensus-eps-surprise-chart | United Parcel Service, Inc. Quote
U.S. Domestic Package revenues increased 9.3% year over year to $11,456 million in the first quarter, driven by 8.5% volume growth across all products. Notably, UPS Next Day Air volumes were up 20.5%. This uptrend was attributable to gains pertaining to automated hubs and other transformation investments. Segmental operating profit plunged more than 40% on an adjusted basis to $401 million in the quarter.
Revenues at the International Package division came in at $3,383 million, down 2%. International cost per piece dipped 0.5%, mainly owing to currency-related impact. Segmental operating profit came in at $558 million in the reported quarter on an adjusted basis, reflecting an8.8% decrease.
Supply Chain and Freight revenues fell marginally to $3,196 million. Operating profits in the segment dropped 25.1% on an adjusted basis to $158 million in the first quarter. Results were hurt by the sluggishness in economic activity due to the pandemic.
Cash from operations were $2.6 billion at the end of the reported quarter. UPS, carrying a Zacks Rank #3 (Hold), generated free cash flow of $1.6 billion on an adjusted basis in the same period. The company’scapital expenditures (adjusted) were $939 million in the quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other Transportation Stocks
CSX Corporation CSX reported first-quarter 2020 earnings of $1 per share, beating the Zacks Consensus Estimate of 92 cents. However, the bottom line slipped approximately 2% year over year due to weak revenues.
Union Pacific’s UNP first-quarter 2020 earnings of $2.15 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line improved 11.4% on a year-over-year basis.
Canadian Pacific’s CP first-quarter 2020 earnings (excluding $1.08 from non-recurring items) of $3.3 (C$4.42) per share surpassed the Zacks Consensus Estimate of $2.86. Quarterly earnings also surged more than 55% year over year.
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