UPS reported better-than-expected first-quarter earnings but with revenue coming in below Wall Street predictions Tuesday. The package delivery giant also reaffirmed full-year guidance. Shares of UPS angled higher early.
The package delivery giant said Tuesday that Q1 EPS fell 35% to $1.43 while revenue declined 5% to $21.7 billion. Wall Street had expected Q1 EPS of $1.28 with revenue totaling $21.84 billion. Wall Street monitors UPS earnings performance and outlook as on-the-ground readings of overall economic activity.
"Our financial performance in the first quarter was in line with our expectations, and average daily volume in the U.S. showed improvement through the quarter. Looking ahead, we expect to return to volume and revenue growth," UPS Chief Executive Carol Tomé said in the earnings release Tuesday.
The Q1 results mark the company's fifth straight quarterly earnings decline, and its seventh missed revenue target.
The company also on Tuesday reaffirmed 2024 guidance, which it originally released at the end of January. At the end of Q1, UPS still expects 2024 revenue to range from approximately $92 billion-$94.5 billion and operating margin of 10%-10.6%.
UPS stock gained 2.7% to 149.23 during market action Tuesday. Shares angled 1.8% higher to 145.36 on Monday. UPS stock is down more than 2% in April and has dropped nearly 8% in 2024.
UPS Stock Performance
Shares of UPS plummeted more than 8% on March 26 while it forecast 2026 total revenue above estimates as the delivery company unveiled a three-year plan prioritizing high-margin parcels and cost-cutting.
On March 26, UPS forecast 2026 revenue between $108 billion and $114 billion along with consolidated adjusted operating margin growth of 13%. The delivery giant also said it expects total capital expenditures from 2024-2026 between $17 billion and $18 billion, more than 5% of total revenue.
This came after UPS at the end of January announced plans to reduce its workforce by 12,000 along with worse-than-expected fourth-quarter revenue and 2024 guidance well below analyst expectations.
Meanwhile at the end of October 2023, UPS cut its 2023 revenue forecast due to lower e-commerce delivery demand amid its labor negotiations. At the time, the world's biggest package delivery firm expected full-year revenue between $91.3 billion and $92.3 billion, down from its prior forecast of about $93 billion.
During labor talks and even after a deal was reached, customers diverted an average 1.5 million packages a day — a steeper decline than it previously had forecast — to competitors, UPS executives said at the end of Q3.
However, UPS could not muster enough 2023 sales to hit its own forecast.
Rival FedEx Expects 'Volatile' 2024
On March 21, UPS- rival and shipping heavyweight FedEx surprised Wall Street, reporting better-than-expected fiscal 2024 third-quarter earnings while revenue came in below expectations.
FedEx reported earnings of $3.86 per share, up 13% compared to Q3 2023, in the fiscal third quarter with revenue falling 2% to $21.74 billion. For the rest of the fiscal year, FedEx expects revenue to be "pressured by volatile macroeconomic conditions negatively affecting customer demand for our services and constraining yield growth."
FedEx maintained its full fiscal-year outlook of "low-single-digit percentage decline" in revenue and narrowed its earnings view to $17.25-$18.25 per share. In December 2023, FedEx predicted full 2024 earnings of $17-$18.50 per share.
Both FedEx and UPS have lost ground to Amazon.com in parcel deliveries in recent years. In 2022, Amazon delivered more packages in the U.S. than UPS. Amazon previously beat out FedEx in 2020. The Wall Street Journal reported late in 2023 that the e-commerce giant is likely to widen the delivery gap.
The USPS — United States Postal Service — remains the largest parcel delivery service by volume.
FedEx stock edged up 0.8% to 272.23 early Tuesday.
UPS stock has a 23 Composite Rating out of a best-possible 99. Shares also have a 19 Relative Strength Rating and a 50 EPS Rating.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
YOU MAY ALSO LIKE:
Is Tesla Stock A Buy Or A Sell?
Get Full Access To IBD Stock Lists And Ratings
Learning How To Pick Great Stocks? Read Investor's Corner
Is Rivian A Buy Right Now After It Launched Its New Product Line?
