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UPS Missed 4Q15 Revenue Estimates but Beat Earnings Estimates

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UPS’s 4Q15 results: A mixed bag

United Parcel Service (UPS) reported 4Q15 earnings in the early hours of February 2, 2016. The company missed analyst revenue estimates but beat earnings estimates. Revenues grew by 1.0% year-over-year to $16.1 billion, missing analyst estimates by 1.4%, or $230 million. The company reported earnings per share of $1.57, which beat analyst estimates by 10.5%.

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Stock performance

Markets welcomed UPS results and guidance for 2016. The stock gained almost 2% in pre-market trading. On February 2, UPS stock gained 0.65%. In contrast, rival FedEx (FDX) lost 1.6% on the same day.

For 2015, both the courier service players had similar performances. UPS lost 14% in 2015 as compared to FDX’s losses of 15%.

However, UPS’s smaller rivals rose. Air Transport Services Group’s (ATSG) stock was up by 29% while Air T’s (AIRT) stock was up by 6%. Meanwhile, logistics providers C.H. Robinson Worldwide (CHRW) lost ~14% in 2015, and Expeditors International (EXPD) gained ~1%.

The parcel industry is considered a reflection of the economy as a whole. The US economy gave a lackluster performance in 2015 with its real GDP (gross domestic product) increasing only 1.8%, according to the Bureau of Economic Analysis. The strong US dollar has hurt the top lines of all multinationals and sluggish global growth across economies such as China has only added to these companies’ woes. The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 Index, helps gauge the pulse of the economy. For 2015, SPY gained 1.5%.

Series overview

In this 4Q15 post-earnings series, we’ll discuss what segments helped UPS perform in the quarter. We’ll also discuss important updates for the company. More importantly, we will look at UPS’s plan for 2016 and analyze the factors that can help it achieve its goals. Finally, we’ll wrap up the series by looking at UPS’s valuation multiple compared with the multiples of its peers.

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