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UPS Shares Rise Due to the Profit Spike

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Bumper earnings send shares up

YTD (year-to-date), UPS shares have fallen close to 15%. This is similar to its rival FedEx (FDX). Logistics provider C.H. Robinson Worldwide (CHRW) has also fallen close to 15% YTD, while Expeditors International (EXPD) rose 5%. The iShares Transportation Average ETF (IYT) also fell ~17% YTD. UPS has a 7.60% holding in IYT.

United Parcel Services (UPS) reported its second quarter earnings on July 28, 2015.

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  • The company saw its revenue fall by 1.20% YoY (year-over-year) to $14.1 billion due to unfavorable currency exchange rates and reduced fuel surcharges. The revenue fell shy of most analysts’ estimates of about $14.5 billion.
  • However, the strength in its International segment led to strong profit growth of 171% YoY to $1.23 billion. This sent the EPS (earnings per share) to $1.35 per share. The earnings beat the average analysts’ estimates of $1.26 by a huge margin of about 6%.
  • Total shipments rose to 1.1 billion packages—2.10% growth. This growth was led by US deferred air products and international export shipments.

The strong bottom line performance, along with the company’s bullish EPS guidance of $5.05–$5.30 for the full year, sent the company’s stock to new heights. The stock soared higher by about 5% on the result day with strong trading volumes. UPS expects its international business to drive the company towards the upper end of its guidance while it sees some weakness in the domestic markets.

Company overview

UPS is arguably the world’s largest package delivery services company. It’s a leading global provider of specialized transportation and logistics services. The company provides air, ocean, ground, and electronic delivery services in more than 200 countries and territories around the world. UPS has the largest market share in the logistics industry. It’s closely followed by FedEx.

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