Shares of United Parcel Service Inc. fell Monday as investors braced for the package delivery giant’s quarterly results, which have not been so kind to investors in the recent past.
The company is expected to reveal its fourth-quarter earnings report Tuesday around 6 a.m. Eastern time. UPS shares fell on the day of each of its last three reports by an average of 5.6%, and fell on the day of six of its last seven reports.
UPS shares UPS,
it fell 0.8% on Monday. They have rallied 14% over the past three months, while shares of rival FedEx Corp. FDX,
they gained 4.7% and the S&P 500 SPX index advanced 18.3%.
Profit hasn’t been the issue, as UPS has exceeded earnings per share expectations for the past 14 consecutive quarters.
Revenue, however, has missed expectations over the past five quarters. The company has cut its full-year revenue forecast in each of the past three quarters and provided a lower-than-expected outlook in the previous quarter. (See below for Wall Street’s current consensus expectations for the fourth quarter.)
Light: UPS shares fall to more than 3-year low after revenue still fell short of expectations.
There’s reason to worry that another shortfall or outlook cut could be in the works, according to Evercore ISI analyst Jonathan Chappell. Based on his analysis of trends, Chappell said “there may be additional downsides to UPS’s domestic revenue in the United States. Furthermore, the slowdown in Chinese exports represents a hindrance to UPS’s international revenue.”
There have also been labor-related headwinds of late that may have allowed UPS’s rivals to benefit at its expense. When Brie Carere, FedEx’s chief customer officer, was asked in December whether the company had been able to maintain the market share it had gained while UPS was engaged in tense labor negotiations, Carere responded: “Confidently yes,” according to an AlphaSense transcript.
Read also: UPS blames ‘late and noisy’ Teamsters talks for lack of revenue and slashing of prospects.
TD Cowen analyst Helane Becker said labor issues made the fourth quarter difficult for UPS, as the company had to figure out how to cover the cost of a new contract with the Teamsters union without steering shippers to other delivery companies .
Becker reiterated his market perform rating on UPS shares and maintained his price target at $175.
Below are UPS analysts’ current average estimates compiled by FactSet for some key financial metrics and their value as of the end of the third quarter.
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The FactSet consensus for earnings per share was $2.46, down from $3.62 in the year-ago period. The EPS consensus has fallen significantly since the end of the third quarter, when it stood at $3.03.
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The FactSet revenue consensus was $25.398 billion, down from $27.033 billion a year ago and below the consensus of $26.247 billion on Sept. 29.
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Revenue from domestic packages in the United States is expected to amount to $17.39 billion. This compares to the consensus of $17.82 billion as of September 29 and the $18.25 billion reported a year ago.
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International revenue is expected to fall to $4.64 billion, compared to $4.95 billion last year. At the end of September the consensus was $4.70 billion.
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The FactSet consensus for 2024 revenue fell to $95.51 billion, from $98.00 billion on Sept. 29.