Shares of United Parcel Service (UPS) are up nicely on Tuesday, climbing about 5% at last check.
The stock is delivering the gains after the package-delivery stalwart reported fourth-quarter results. The stock move is helping to trigger a potential breakout.
UPS reported strong earnings results but missed on revenue expectations.
The midpoint of management’s full-year revenue outlook was slightly below consensus estimates but largely seems fine by Wall Street’s standards.
As we noted a few days ago, investors seem to be giving a pass to companies that have respectable outlooks, even if they are a bit below expectations.
Of course, UPS's unveiling of a new $5 billion buyback plan seems to be boosting investors' spirits. Let’s see how that’s helping to fuel the stock higher.
Trading UPS Stock on Earnings
Chart courtesy of TrendSpider.com
Investors are stepping up and buying UPS stock after the earnings report. It helps that consumers continue to spend, that the shares trade at about 15 times earnings and the stock pays a forward yield of about 3.6% after UPS also raised its dividend by 6.6%.
With Tuesday’s post-earnings rally, UPS shares are rotating over last week’s high, as well as the 61.8% retracement of the current range. Both measures come into play near $184.
Currently contending with the 50-week moving average, UPS stock is not necessarily out of the woods. That is to say it’s not in a full-blown breakout just yet. But the action is certainly constructive for the bulls.
If UPS stock can gain traction over $184 and the 50-week moving average, $188 is in play next, followed by the fourth-quarter high at $191.60.
Above that level triggers a quarterly-up rotation, which could put the $199.50 gap-fill level in play.
On the downside, the bulls should be cautious if the stock fades back below $184 here. While it will still be above its key daily moving averages, UPS stock will at best hit a stumbling block and at worst be seeing a shift toward bearish momentum.
Further, a break of $180 would put this week’s low in play near $176.50, while a move below that figure puts the low-$170s back in play.
