UPS Shares Recover and Rise Following Extended Profit Streak and Improved Deliveries Despite Revenue Miss

Shares of United Parcel Service Inc. (UPS) rebounded and advanced on Tuesday after the company reported another quarter of earnings that surpassed expectations, continuing its impressive streak. Although UPS once again did not meet revenue forecasts, there was a noticeable improvement in package delivery rates as the quarter progressed, compared to a sharper decline in the previous quarter. Following the announcement, UPS shares experienced volatility but ultimately gained momentum, rising 2% by midday, contributing to a four-day winning streak. This recovery came after an initial drop in pre-market trading.

For the first quarter, UPS’s net income decreased to $1.11 billion, or $1.30 per share, from $1.9 billion, or $2.19 per share, a year earlier. However, adjusted earnings of $1.43 per share exceeded the consensus estimate of $1.28, marking the 16th consecutive quarter of surpassing adjusted EPS expectations. Despite these strong earnings, operating profit fell significantly, largely due to costs associated with a new contract with the Teamsters union.

Total revenue fell by 5.3% to $21.71 billion, missing the anticipated $21.84 billion and marking the sixth consecutive quarter of revenue shortfalls. The decrease was felt across all segments, with U.S. domestic-package revenue down 5% and international revenue falling 6.3%, particularly due to challenges in Europe and Asia. Nonetheless, supply chain revenue slightly exceeded expectations, highlighting some areas of resilience within the company’s operations.

Looking ahead, CEO Carol Tomé discussed the new air cargo business won from the U.S. Postal Service, noting it should enhance revenue growth and operating margins. The company is confident in handling this new business with existing resources, planning minimal new hires. UPS reaffirmed its full-year revenue forecast, which remains in line with analyst expectations, and maintained its capital expenditure outlook.

Overall, while facing headwinds in revenue performance and operational costs, UPS demonstrated resilience with strong earnings results and strategic plans for growth amidst ongoing economic challenges.