United Parcel (UPS) Beats Q1 Earnings, Revenue Estimates

United Parcel Service, Inc. (NYSE:UPS) reported first-quarter 2017 earnings of $1.32, beating the Zacks Consensus Estimate of $1.30 per share. Earnings increased 3.9% on a year-over-year basis. Results were aided by the substantial increase in operating profit of the Supply Chain and Freight unit.

Revenues improved 6.2% to $15,315 million from the year-ago quarter, beating the Zacks Consensus Estimate of $15,179.5 million. Revenues grew in all three segments of the company.

Segmental Details

U.S. Domestic Package revenues climbed 5% year over year to $9,535 million in the reported quarter. But segmental operating profit declined to $1,076 million.

Segmental average daily package volumes climbed 2.6% driven by a 2.3% rise in Ground products and 3.9% growth in Next Day Air services. Deferred Air products were up 4.1%. Average revenue per piece was up 2.4%.

International Package revenues improved 4.9% to $3,058 million despite the adverse impact of foreign currency. Export shipments improved 14% in the first quarter on the back of growth in Europe and Asia. However, segmental operating profits declined to $529 million in the quarter. The measure came in at $648 million on a currency neutral basis. Revenue per piece grew 1.1%.

Supply Chain and Freight revenues increased 12.5% to $2,722 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 22% to $179 million in the reported quarter.

Liquidity

United Parcel generated free cash flow of $693 million and spent $938 million as capital expenditure in the reported quarter. Moreover, United Parcel paid approximately $774 million as dividend to shareholders in the first quarter of 2017. Additionally, it bought back 4.2 million shares for $450 million. We are impressed with the company’s efforts to reward shareholders consistently through buybacks and dividend payouts.

Outlook

United Parcel is 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 currently stands at $5.95 per share.

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

Other Key Releases Coming Up

Investors interested in the broader transportation space keenly await the first-quarter earnings reports of Spirit Airlines (NASDAQ:SAVE) , Copa Holdings (NYSE:CPA) and Air Lease Corporation (NYSE:AL) that are slated to be released on Apr 28, May 10 and May 4, respectively.

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