UPS Stock Surges as Revenue and Profits Rebound After Two-Year Slump
1min read United Parcel Service Inc. (UPS) has recently experienced a resurgence in revenue and profit growth for the first time in two years, attributed to an increase in business volume, higher package profitability, and stabilized labor costs. The company's shares have seen an impressive uptick, marking a significant rise in recent trading sessions.
In the third quarter, UPS reported a 5.6% year-over-year increase in revenue to $22.2 billion, meeting analysts' expectations. The U.S. domestic package segment saw revenue climb by 5.8% to $14.45 billion, while the international segment rose by 3.4% to $4.41 billion. Revenue from the supply chain and freight division grew by 8.0% to $3.38 billion.
Adjusted operating profit increased by 22.8% to $1.98 billion with an adjusted operating margin of 8.9%, surpassing the previous year's 7.7%. Additionally, UPS reported an adjusted net income of $1.503 billion, an 11.7% increase, with adjusted earnings per share of $1.76, beating both the analysts' consensus of $1.63 and the prior year's $1.57.
This financial outcome indicates a reversal of a six-quarter streak of declining adjusted earnings per share. The package delivery sector had been facing headwinds from weakened air transport demand, as inflation-weary consumers shifted to more affordable sea shipping options, compressing profits.
UPS CEO Carol Tomé stated that the company has "returned to revenue and profit growth after a challenging 18 months." The firm noted increased U.S. daily freight volumes, pricing power, and air transport activity.
Looking ahead, UPS anticipates 2024 revenue to reach approximately $91.1 billion, slightly below prior forecasts of $93 billion. The firm projects an adjusted operating margin of 9.6%, exceeding earlier expectations of 9.4%, with planned annual capital expenditures around $4 billion and a stock repurchase target of $5.4 billion.
