United Parcel Service (UPS) stock is comfortably higher in Thursday's session after the international logistics giant beat top- and bottom-line expectations for its third quarter.
In the three months ended September 30, UPS reported a 5.6% year-over-year increase in revenue to $22.2 billion, thanks in part to a 5.8% jump in revenue and a 6.5% rise in average daily volume for its U.S. domestic segment. The company said earnings per share (EPS) were up 12.1% from the year-ago period to $1.76.
"After a challenging 18-month period, our company returned to revenue and profit growth," said UPS CEO Carol Tomé in a statement. "Peak season is nearly upon us, and we are ready to deliver another successful holiday season and continue the progress we demonstrated in the third quarter."
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The results came in higher than the $22.1 billion in revenue and earnings of $1.63 per share that analysts were anticipating, according to CNBC.
UPS also updated its full-year outlook to reflect its performance in the third quarter and its recently completed disposition of Coyote Logistics. It now anticipates revenue of approximately $91.1 billion for all of 2024, down from its previous forecast for revenue of $93 billion. Operating margin is expected to arrive at 9.6% vs the 9.4% it guided for in its Q2 report.
Is UPS stock a buy, sell or hold?
UPS has vastly underperformed the broader market in 2024. The large-cap stock is down 13% on a total return basis (price change plus dividends) vs the S&P 500's 23% gain.
But Wall Street is betting on a quick turnaround for the industrial stock. According to S&P Global Market Intelligence, the average analyst target price for UPS stock is $145.17, representing implied upside of more than 5% to current levels. Additionally, the consensus recommendation is a Buy.
Bernstein analyst David Vernon is one of those with an Outperform (Buy) rating on UPS. In an October 21 note, Vernon wrote that the company has enough growth potential to warrant the bullish outlook. Additionally, its fat 5% dividend yield "is worth more in a falling rate environment."
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