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UPS Slides ~6% as Q1 Earnings and Revenue Miss Estimates

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UPS misses expectations

Shares of United Parcel Service (UPS) opened ~6% lower today after the company announced its first-quarter earnings results, which fell short of analysts’ expectations.

In the quarter, UPS reported adjusted EPS of $1.39, a couple of cents lower than analysts’ estimate of $1.41 and down 10.3% YoY (year-over-year).

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The company’s dismal bottom line result was mainly due to sluggish revenue growth and higher expenses. The company’s first-quarter revenue rose marginally to $17.16 billion from $17.11 billion in the previous year’s quarter. However, its quarterly revenue was much lower than analysts’ forecast of $17.78 billion.

UPS’s first-quarter revenue was negatively affected by a series of harsh winter storms in the United States and a shift in the timing of Easter to the second quarter. The company also stated that its dismal top line performance reflected the negative impact of one fewer operating day during the quarter compared to the previous year’s quarter.

UPS’s bottom line results were also negatively affected by increased operating expenses. The company’s operating costs rose 1.1% YoY to $15.77 billion from $15.59 billion in the previous year’s quarter. The YoY increase was mainly the result of higher compensation and benefit payments during the quarter.

Peers’ performances

On March 19, the company’s rival FedEx (FDX) reported dismal revenue growth for the third quarter of fiscal 2019 due to the economic slowdown in Europe and Asia–particularly in China. FedEx stated that the ongoing trade dispute had weakened its logistics and delivery business in China. FDX’s fiscal 2019 third-quarter revenue rose a mere 2.9% YoY compared to the growth of more than 9% it had registered in the previous five quarters.

The majority of delivery and logistics (IYT) companies have yet to report their first-quarter earnings results. Analysts’ first-quarter expectations for Old Dominion Freight Lines (ODFL) and XPO Logistics (XPO) project YoY revenue rises of 7.5% and 1.6%, respectively.

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