United Parcel Service reported its first revenue and earnings gains in two years early Thursday, sending its shares into a brisk rally in premarket trade. Freight delivery peer FedEx picked up on the positive turn, its shares also rising early Thursday.
UPS third-quarter earnings came in at $1.76 per share, up 12% and above consensus views for $1.63. Revenue edged up less than 1% to $22.2 billion. Analysts projected $22.14 billion.
The company reported consolidated operating profit of $2.0 billion, up 47.8% vs. the third quarter of 2023, and up 22.8% on a non-GAAP adjusted basis.
Chief Executive Carol Tome read the results as proof of the company executing on streamlining plans that have downsized its workforce by more than 50,000 workers over four years.
"After a challenging 18-month period, our company returned to revenue and profit growth," Tome said in the company's earnings release Thursday. "Peak season is nearly upon us, and we are ready to deliver another successful holiday season and continue the progress we demonstrated in the third quarter."
Adjusted operating profit for the U.S. domestic business led the gains, up 31.7% compared to the year-ago third quarter. Revenue rose 5.8% to $14.45 billion. International segment operating profit gained 17.3%, with revenue up 3.3% to $4.41 billion.
The U.S. revenue gain was driven by a 6.5% increase in average daily volume.
UPS Stock; Revenue View Trimmed
UPS trimmed its full-year revenue view, now expecting $91.1 billion, down from its previous $93 billion view. In 2023, the company's sales totaled $90.96 billion.
Analyst consensus projects a full-year earnings decline of 15.9% for UPS this year, followed by a 19.2% gain for 2025.
The decision to revise lower revenue expectations comes as UPS in Q3 completed the sale of Coyote Logistics, the company's freight-brokerage business, for slightly more than $1 billion to RXO.
"The expected revenue and profits associated with this business had been included in the company's previously provided revenue and operating margin targets," UPS said Thursday.
UPS added that Q3 results include an after-tax net benefit of $36 million, or 4 cents per share, comprised of a $152 million gain resulting from the divestiture of the Coyote Logistics business.
UPS stock jumped 5.3% to 138.35 during market trade on Thursday. The stock has dropped 16% in 2024 and going into Thursday' market open was down 3.6% in October.
Meanwhile, FedEx stock advanced 1.8% Thursday. FedEx has outperformed UPS in 2024, advancing around 6% this year. FedEx reported its fiscal first-quarter results on Sept. 19. Analysts project an 11.5% rise in earnings for FedEx for the fiscal year ending in May.
The five stocks in the IBD-tracked Transport-Air Freight industry group are collectively down 2.9% in 2029.
Please follow Kit Norton on X @KitNorton for more coverage.
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