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UPS Q4 Earnings & Revenues Beat on Surge in Online Shopping

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United Parcel Service’s UPS fourth-quarter 2020 earnings (excluding $6.41 from non-recurring items) per share of $2.66 surpassed the Zacks Consensus Estimate of $2.11. The bottom line also improved 26.1% year over year. Results were aided by a boom in online shopping during the holidays with the coronavirus pandemic continuing to restrict people to their homes.

Driven by the e-commerce surge, quarterly revenues at UPS climbed 21% year over year to $24,896 million, surpassing the Zacks Consensus Estimate of $22,785.6 million. Results were aided by a 10.6% rise in consolidated average daily volumes. Also, overall operating profit rose 26% on an adjusted basis in the fourth quarter, boosted by double-digit growth in adjusted operating profit across all segments.

The earnings and revenue beat, driven by higher online shopping, pleased investors. As a result, the stock gained in pre-market trading.

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

Segmental Details

U.S. Domestic Package revenues increased 17.4% year over year to $15,744 million in the fourth quarter, driven by growth from small and medium-sized businesses. Revenue per piece ascended 7.8%. Segmental operating profit (adjusted) was up 14.3% to $1,379 million in the quarter. Adjusted operating margin in the December quarter was 8.8%.

Revenues at the International Package division summed $4,770 million, up 26.8% on the back of strong demand from Asia and Europe. Average daily volumes rose 21.9%, led by export growth from all regions. Segmental operating profit (adjusted) totaled $1,160 million in the reported quarter, up 43.4%.

Supply Chain and Freight revenues jumped 29% to $4,382 million driven by higher demand for freight forwarding. Operating profits (on an adjusted basis) increased 26.3% to $331 million in the December quarter.

Annual Results

For the full year, UPS’ earnings (on an adjusted basis) came in at $8.23 per share. Revenues increased 14.2% year over year to $84.6 billion. The Zacks Consensus Estimate for earnings was of $7.68 per share while the same for revenues was $82.55 billion.

UPS, currently carrying a Zacks Rank #3 (Hold), generated free cash flow of $5.1 billion in 2020. The company’s capital expenditures (adjusted) were $5.6 billion at the end of 2020. During the year, UPS paid dividends to the tune of $3.6 billion to its shareholders, up 5.2% from the 2019 levels.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Outlook

Due to the coronavirus-led uncertainty, the company did not provide a 2021 guidance for revenues and earnings per share. However, the current-year projection for capital allocation was announced by UPS. Capital expenditures are expected at around $4 billion. Dividends, subject to the board’s clearance, are expected to grow in 2021. Effective tax rate is predicted to be 23.5%. Moreover, UPS has no plans to buy back shares or tap the debt capital market in 2021.

Sectorial Snapshots

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

United Airlines UAL incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Further, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.

J.B. Hunt Transport Services JBHT reported earnings of $1.44 per share, which beat the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.

Norfolk Southern Corporation’s NSC earnings of $2.64 per share surpassed the Zacks Consensus Estimate of $2.48. Moreover, the bottom line improved 3.5% on a year-over-year basis on lower costs.

The company’s railway operating revenues in the quarter under review came in at $2,573 million, outpacing the Zacks Consensus Estimate of $2,556.4 million.

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