It has been about a month since the last earnings report for United Parcel Service (UPS). Shares have lost about 2% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is UPS due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for United Parcel Service, Inc. before we dive into how investors and analysts have reacted as of late.
Earnings Beat at UPS in Q1
Quarterly earnings per share (excluding 5 cents from non-recurring items) of $1.07 beat the Zacks Consensus Estimate of $1.04 but declined 28.2% year over year. Revenues of $21.2 billion surpassed the Zacks Consensus Estimate of $21 billion but decreased 1.6% year over year.
U.S. Domestic Package revenues of $14.1 billion (above our estimate of $13.8 billion) decreased 2.3% year over year, owing to an expected decline in volume. Revenue per piece grew 8.3% year over year. Segmental operating profit (adjusted) fell 44.1% year over year to $565 million. The adjusted operating margin for the segment was 4%.
Revenues in the International Package division totaled $4.54 billion (above our estimate of $4.38 billion), which increased 3.8% year over year, owing to a 10.7% increase in revenue per piece. Segmental operating profit (adjusted) totaled $551 million, down 15.7% year over year. The adjusted operating margin for the segment was 12.1%.
Supply Chain Solutions’ revenues of $2.53 billion (below our estimate of $2.81 billion) decreased 6.5% year over year, owing to a decline in volume in the Mail Innovations business. Operating profit (on an adjusted basis) rose more than 100% year over year to $206 million. The adjusted operating margin for the segment was 8.1%.
The overall adjusted operating margin was 6.2%.
UPS’ 2026 Outlook Reaffirmed
Management has reinstated full-year 2026 sales guidance, projecting revenues of approximately $89.7 billion, above the 2025 reported figure of $88.7 billion.
Adjusted operating margin is still expected to be around 9.6%. Capital expenditures are estimated to be around $3 billion, with dividend payments expected to be around $5.4 billion (subject to board approval). The effective tax rate is expected to be around 23%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 5.61% due to these changes.
VGM Scores
At this time, UPS has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, UPS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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United Parcel Service, Inc. (UPS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).