United Parcel Service (UPS) shares are plummeting in Tuesday's session, with the logistics giant heading toward its biggest one-day loss ever, according to MarketWatch. Sparking the selloff in UPS stock is the company's disappointing Q2 earnings results and downwardly revised full-year outlook.
For the three months ended June 30, UPS reported a 1% year-over-year decline in revenue to $21.8 billion, due in part to a 2% decline in its domestic segment. The company's earnings per share (EPS) declined 30% from the year-ago period to $1.79.
"This quarter was a significant turning point for our company as we returned to volume growth in the U.S., the first time in nine quarters," UPS CEO Carol Tomé said in a statement. "As expected, our operating profit declined in the first half of 2024 from what we reported last year. Going forward we expect to return to operating profit growth."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results came up well short of analysts' expectations. Wall Street was anticipating revenue of $22.2 billion and earnings of $1.99 per share, according to CNBC.
As a result of its performance in the first half of the year, United Parcel Service updated its full-year outlook. Here's what the company expects to achieve now versus its previous guidance:
| Metric | New outlook | Previous outlook |
|---|---|---|
| Consolidated revenue | Approximately $93 billion | Approximately $92 billion to $94.5 billion |
| Consolidated adjusted operating margin | Approximately 9.4% | Approximately 10% to 10.6% |
| Capital expenditures | Approximately $4 billion | Approximately $4.5 billion |
On a positive note, UPS said it is restarting its stock buyback program and is targeting around $500 million in share repurchases in 2024. Stock buybacks can boost value for shareholders.
Is UPS stock a buy, sell or hold?
Wall Street is bullish on the industrial stock despite underperformance in recent years, including a more than 19% decline on a price basis so far in 2024. According to S&P Global Market Intelligence, the average analyst target price for UPS stock is $161.53, representing implied upside of nearly 30% to current levels. Additionally, the consensus recommendation is a Buy.
However, it could take time for UPS to find its footing operationally.
"The current overcapacity situation is putting significant pressure on carriers, and one of our experts thinks shippers have renegotiated contract rates with the likes of UPS and FedEx (FDX), reducing rates by 14-17%," Third Bridge analyst Anthony DeRuijter said in an emailed statement. "It could take six quarters before demand catches up to capacity, given the investments made during the pandemic boom era."
Related Content
-
How to Adopt AI and Keep Employees HappyThe Kiplinger Letter As business adoption of AI picks up, employee morale could take a hit. But there are ways to avoid an AI backlash.
-
Don’t Let Your Dreams Go Unfulfilled: Plan for Your Passion in RetirementFollow these three steps to ensure you are emotionally and financially prepared for your passion in retirement.
-
What to Know About Multisector ETFsMultisector bond funds allow investors to pick and choose among a wide array of assets.
-
I'm an Estate Planning Attorney: These Are the Two Legal Documents Everyone Should HaveEvery adult should have a health care proxy and power of attorney — they save loved ones time, money and stress if a sudden illness or injury leaves you incapacitated.
-
I'm a Financial Professional: Here's My Investing Playbook for Political UncertaintyFor successful long-term investing in a politically charged environment, investors should focus on economic data, have a diversified portfolio and resist reacting to daily headlines.
-
Rally Pauses for Hot Earnings, Cool Data: Stock Market TodayMarkets were mostly mixed Tuesday after decisive moves Friday and Monday.
-
The Truth About the Dark Side of Rooftop Solar PanelsRampant bankruptcies in the solar panel industry have left many consumers with systems that don't work and no way to get them fixed. Worse, they're being hounded to keep paying despite not receiving what they were promised. What can they do?
-
Six Big Beautiful Opportunities: Advisers' Guide to Tax and Client StrategiesHere are several ways financial professionals can help their clients maximize opportunities in the One Big Beautiful Bill Act, which extends key TCJA provisions, introduces increased deductions for people 65 and older and more.
-
Dow Rises 585 Points on Rate Cut Hope: Stock Market TodayStocks moved more than 1% again Monday, this time to the upside following the Jobs Friday sell-off.
-
How Big Will the Fed Rate Cut Be This Fall?A dismal July jobs report has lifted expectations for fall rate cuts. How low could the fed funds rate be by year's end?
