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
-
The Trump GOP Tax Bill Could Worsen California Cost of LivingState Tax Energy bills in the Golden State may shock you if Republican lawmakers in Congress remove certain energy tax credits through Trump's 'big, beautiful bill.'
-
The Best Covered-Call ETFs to BuyCovered-call ETFs can provide consistent, above-average income generation, but they can also cap potential upside. Here's what to look for.
-
The Best Covered-Call ETFs to Buy
Covered-call ETFs can provide consistent, above-average income generation, but they can also cap potential upside. Here's what to look for.
-
Wealth Advisers: In Estate Planning, the End Is Just the BeginningWe need to keep the lines of communication with our clients open so that we can anticipate and help them navigate issues that arise over time.
-
Stood Up by a Radio Show: But Was It a Breach of Contract?A conscientious financial planner reschedules his clients after being invited onto a talk show and ends up losing one of them at a cost of $5,000. What does the radio show owe him, if anything?
-
Stock Market Today: Stocks Stable as Inflation, Tariff Fears EbbConstructive trade war talks and improving consumer expectations are a healthy combination for financial markets.
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.
-
The Six Pros This Adviser Says You Need to Sell Your BusinessSelling your business isn't as simple as getting the best price and walking away. These are the six professionals you'll need to get a deal across the finish line.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build WealthConsistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key PiecesIf retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
