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UPS Q2 Earnings & Revenues Top Estimates, Rise Y/Y, Stock Up

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United Parcel Service’s UPS second-quarter 2019 earnings (excluding 2 cents from non-recurring items) of $1.96 per share surpassed the Zacks Consensus Estimate by 3 cents. The bottom line also increased on a year-over-year basis driven by greater efficiencies.

UPS recorded revenues of $18,048 million in the quarter, which edged past the Zacks Consensus Estimate of $17,956.5 million. Moreover, the top line increased 3.4% on a year-over-year basis. Results were aided by an uptick in demand pertaining to domestic shipments from e-commerce shippers.

Following the impressive quarterly performance, the stock gained in pre-market trading.

Segmental Details

U.S. Domestic Package revenues climbed 7.7% year over year to $11,150 million in the second quarter driven by volume growth in all products. The greatest increase (up in excess of 30%) was in UPS Next Day Air volume. Results were aided by increased demand for air services from customers in healthcare and retail. Segmental operating profit improved 8% on an adjusted basis to $1,226 million in the quarter mainly due to the sharp increase in demand for the company’s next-day services. Additionally, growth in cost per piece was reduced by network efficiencies.

Revenues at the international package division came in at $3,505 million, down 2.7%. International volumes declined marginally due to global macroeconomic pressures. Total revenue per piece declined slightly. However, the measure improved nearly 2% on a currency-adjusted basis. Segmental operating profit came in at $665 million in the reported quarter on an adjusted basis, reflecting an increase of 1.7%.

Supply Chain and Freight revenues decreased 3.1% to $3,393 million due to trade-related sluggishness. Driven by its focus on revenue quality, the UPS Freight unit registered a 3.9% increase in revenue per LTL (less-than-truckload) hundredweight in the reported quarter. Operating profits in the segment increased 10.5% on an adjusted basis to $273 million in the second quarter aided by prudent cost management actions.

United Parcel Service, Inc. Price, Consensus and EPS Surprise

 

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

Other Details

Cash from operations were $4.2 billion. UPS, carrying a Zacks Rank #3 (Hold), generated free cash flow of nearly $2.2 billion on an adjusted basis.  The company spent $2.9 billion as capital expenditures in the first half of the year. We are also impressed with the company’s efforts to reward shareholders consistently through buybacks and dividend payouts. On a year-to-date basis, dividend per share increased 5.5%. Moreover, the company repurchased 4.8 million shares for roughly $500 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Outlook

UPS still expects 2019 adjusted earnings per share between $7.45 and $7.75. The mid-point of the guided range ($7.60 per share) is above the Zacks Consensus Estimate of $7.46. Tax rate in 2019 is anticipated between 22% and 24%. Adjusted free cash flow for 2019 is projected between $3.5 and $4 billion.

Upcoming Releases

Investors interested in the Zacks Transportation  sector are keenly awaiting second-quarter 2019 earnings reports from key players like Southwest Airlines LUV , Alaska Air Group ALK and American Airlines AAL . All three carriers are scheduled to report on Jul 25.

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