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UPS' Q3 Earnings & Revenues Surpass Estimates, Increase Y/Y

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United Parcel Service UPS reported third-quarter 2021 earnings (excluding 6 cents from non-recurring items) of $2.71 per share, beating the Zacks Consensus Estimate of $2.52. The bottom line jumped 18.9% year over year with strong performances across all segments.

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

United Parcel Service, Inc. Price and EPS Surprise
United Parcel Service, Inc. price-eps-surprise | United Parcel Service, Inc. Quote

Quarterly revenues of $23,184 million also outperformed the Zacks Consensus Estimate of $22,612.2 million. The top line increased 9.2% year over year, driven by upbeat demand for e-commerce-related package deliveries. Overall operating profit rose 23.4% year over year to $2,970 million in the third quarter, boosted by double-digit growth in the adjusted operating profit across all segments.

In the first nine months of 2021, UPS generated free cash flow of $9,265 million, up 52.3% from the comparable period’s figure in 2020. The company’s capital expenditures were $2,570 million at the end of the same period.

Segmental Details for Q3

U.S. Domestic Package revenues increased 7.4% year over year to $14,208 million. Segmental operating profit (adjusted) jumped 24.8% year over year to $1,414 million in the quarter. Revenue per piece increased 12%. Adjusted operating margin in the September quarter was 10%.

Revenues at the International Package division summed $4,270 million, up 15.5%. The segment’s performance was driven by strong growth in all regions. Segmental operating profit (adjusted) totaled $1,108 million in the reported quarter, up 14%. Adjusted operating margin was 23.5%.

Supply Chain and Freight revenues augmented 8.4% to $4,256 million, aided primarily by the upbeat performance of Forwarding and Logistics businesses. Operating profit (on an adjusted basis) soared 48.3% to $448 million in the September quarter.

Upbeat 2021 Outlook

UPS, currently carrying a Zacks Rank #3 (Hold), raised its 2021 outlook for certain key metrics. The company now anticipates consolidated operating margin to be approximately 13% (earlier guidance:12.7%) in the current year. Return on invested capital is now expected to be approximately 29% from 28% expected previously. Capital expenditures are now estimated to be $4.2 billion (earlier guidance: $4 billion) in 2021. The company expects an effective tax rate of 22.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sectorial Snapshots

Let’s take a look at some of the other earnings releases from companies within the Zacks Transportation sector.

CSX Corporation CSX reported third-quarter 2021 earnings of 43 cents per share, surpassing the Zacks Consensus Estimate of 38 cents. Total revenues of $3,292 million outperformed the Zacks Consensus Estimate of $3030.9 million.

Southwest Airlines LUV incurred a loss (excluding 96 cents from non-recurring items) of 23 cents per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of 27 cents. Operating revenues of $4,679 million outperformed the Zacks Consensus Estimate of $4,581.5 million.

United Airlines UAL incurred a loss (excluding $2.46 from non-recurring items) of $1.02 per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.65. Operating revenues of $7,750 million surpassed the Zacks Consensus Estimate of $7639.7 million.

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