Logistics giant United Parcel Service UPS (UPS) is set to release its Q2 earnings report this week. This has some investors wondering whether it is a good idea to buy shares of UPS beforehand.
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What Wall Street Expects
Wall Street is expecting UPS to report quarterly earnings of $1.56 per share, representing a decline of 12.9% year over year. Revenues are projected to reach $20.85 billion, declining 4.4% from the same quarter last year.
Will UPS be able to beat these estimates? As can be seen below, it has a very good track record in doing just that.
Key Insights Ahead of Earnings
In its first quarter, United Parcel Service beat analysts’ revenue expectations by 2.1% reporting revenues of $21.55 billion, flat year on year. Operating profit climbed 3.3% to $1.7 billion, and adjusted earnings per share rose 4.2% to $1.49, surpassing last year’s $1.43.
Its largest segment – U.S. Domestic – posted revenue growth driven by stronger air cargo performance despite a decline in package volume. Profit in its international segment dipped hit by higher costs and stiffer competition.
Shipping volumes are expected to have continued to struggle in Q2 hit by geopolitical concerns, uncertainty over tariffs and inflation. Labor costs are also likely to have been high leading UPS to, for the first time in its 117-year history, to offer buyouts to its U.S.-based delivery drivers.
The move comes as the company plans to shed 20,000 positions and close 73 facilities as part of the largest network reconfiguration in its history to tackle costs.
These factors have weighed heavily on the UPS share price in the last 6 months, as can be seen below.
However, lower fuel costs during the period may have helped its bottom line. More certainty around tariffs may also have been positive for the company during the quarter and certainly in the months ahead.
Is UPS a Good Stock to Buy Now?
On TipRanks, UPS has a Moderate Buy consensus based on 10 Buy, 9 Hold and 1 Sell ratings. Its highest price target is $133. UPS stock’s consensus price target is $112.74, implying an 8.86% upside.
