On Jun 5, 2014, we issued an updated research report on
United Parcel Service, Inc.
). The company's first-quarter 2014 earnings per share missed the
Zacks Consensus Estimate and also deteriorated from the year-ago
number. Meanwhile, revenues grew year over year but fell short of
the Zacks Consensus Estimate.
Currently, the Zacks Consensus Estimate for second quarter
earnings is pegged at $1.23, representing annualized growth of
For 2014, the company remains hopeful about the changing
scenario of the U.S. and global economy. While markets in the U.S.
are likely to pick up growth trends, in Europe, the economy is
already showing signs of recovery. However, political disturbances
in Ukraine may slow down growth in Europe. In Asia, the company is
witnessing mid single-digit growth, in support of business
Further, Latin American markets are projected to have increased
demand for merchandise exports. Overall, there is a positive
momentum catching in every emerging and established market, which
remains beneficial for global companies like UPS.
Going forward, UPS is also banking upon the prospective
enactments of the trade promotion authority (TPA) bill. Through
TPA, Congress expects to offer guidelines to be used during trade
negotiations, which once approved can support global trade.
UPS increases its freight and general rates from time to time.
For 2014, the company increased rates for Ground, Air and
International, and Air Freight within the U.S., Canada, and Puerto
Rico and between these markets by 4.9%. It also increased general
rates by 4.4% for non-contractual shipments in the U.S., Canada and
The rate hikes remain a key driver for the company's yield
expansion in the current market scenario of low demand trends,
which would ultimately propel profitability going forward and also
provide competitive edge against rivals like
Expeditors International of Washington Inc.
For 2014, the company expects earnings per share to be close to
the lower end of its previous guidance range of $5.05 to $5.30.
This is due to the weather disruption that the company faced in the
first quarter, which is likely to have a trailing impact on the
yearly financial numbers. In addition, the company expects
operating expenses to increase by $100 due to accelerated
deployment of project ORION. This would impact second and third
quarters earnings by 2 cents and 3 cents, respectively.
UPS currently has a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
A better-ranked stock in this sector is
Air Transport Services Group, Inc.
) with a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
UTD PARCEL SRVC (UPS): Free Stock Analysis
EXPEDITORS INTL (EXPD): Free Stock Analysis
FEDEX CORP (FDX): Free Stock Analysis Report
AIR TRANSPT SVC (ATSG): Free Stock Analysis
To read this article on Zacks.com click here.