United Parcel (UPS) Beats Earnings, Revenue Estimates In Q2

United Parcel Service, Inc. (NYSE:UPS) reported second-quarter 2017 earnings of $1.58, beating the Zacks Consensus Estimate of $1.46 per share. Earnings increased 11% on a year-over-year basis. Results were aided by higher revenues.

Revenues improved 7.7% to $15,750 million from the year-ago quarter, beating the Zacks Consensus Estimate of $15,477.3 million. The upside was driven by growth across all the key segments of the company.

Segmental Details

U.S. Domestic Package revenues climbed 8.1% year over year to $9,745 million in the reported quarter, driven by e-commerce growth. Segmental operating profit improved 13.1% to $1,395 million.

Segmental average daily package volumes increased 4.9%, driven by a 4.2% rise in Ground products and 6.4% growth in Next Day Air services. Deferred Air products were up 11%. Average revenue per piece was up 3%.

International Package revenues improved 2.8% to $3,163 million, despite the adverse impact of foreign currency. Export shipments rose 12% in the quarter on the back of growth in Europe and Asia.

However, segmental operating profits decreased 4.9% to $583 million in the quarter. The measure came in at $697 million on a currency neutral basis. Revenue per piece declined 2.3%.

Supply Chain and Freight revenues increased 12% to $2,842 million. Segmental results were aided by the acquisition of Coyote Logistics, which was completed in the third quarter of 2015. Operating profits in the segment climbed 24% to $238 million in the reported quarter.

Other Details

United Parcel has spent $2 billion as capital expenditure in the first six months of the year. Moreover, the company paid approximately $1.4 as dividend to shareholders in the first half of 2017. It also bought back 8.4 million shares for more than $900 million.

In fact, the company’s efforts to reward shareholders consistently through buybacks and dividend payouts are impressive.

Outlook

United Parcel carries a Zacks Rank #4 (Sell) company. It still expects 2017 adjusted earnings per share in the band of $5.80 to $6.10, which includes $400 million of pre-tax currency headwinds. Foreign currency related headwinds are also expected to hurt 2017 results. The Zacks Consensus Estimate for 2017 is currentlypegged at $5.95 per share. Tax rate of 35% is projected for the latter half of 2017.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Transportation space are keenly waiting for second-quarter earnings reports from key players like American Airlines Group, Inc. (NASDAQ:AAL) , Copa Holdings, S.A. (NYSE:CPA) and Air Lease Corp. (NYSE:AL) . While American Airlines is scheduled to report second-quarter results on Jul 28, Copa Holdings and Air Lease will report the same on Aug 9 and Aug 3, respectively.

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