United Parcel Service, Inc.
) reported third quarter 2013 adjusted earnings per share of
$1.16, in line with the Zacks Consensus Estimate. The bottom line
showed a 9.4% improvement over $1.06 earned in the corresponding
quarter last year. The growth was driven by the company's
expansion into emerging markets, increasing healthcare
distribution centers and success of its global retail delivery
Total revenue for the quarter grew 3.4% year over year to $13,521
million but fell short of the Zacks Consensus Estimate of $13,653
million. Increasing e-commerce activities and higher European
export aided the growth.
Total adjusted operating profit registered growth of 8.5% year
over year to $1,804 million. Adjusted operating margin also
improved 60 basis points (bps) year over year to 13.3%.
US Domestic Package
revenues rose 5.0% year over year to $8,254 million in the
reported quarter. Adjusted operating profit grew 15.7% year over
year to $1,186 million. Operating margin expanded 140 basis
points (bps) year over year to 14.4%. The segment gained from
cost efficiency from productivity and safety improvements and an
additional operating day.
Average daily volume increased 2.3% on increased online shopping.
Revenue per piece improved 1.0% year over year buoyed by higher
revenues rose 2.5% year over year to $3,017 million. Operating
profit fell 7.1% year over year to $417 million mainly due to
unfavorable currency and fuel impacts. Operating margin
contracted 150 bps to 13.8%. Average daily volume grew 6.5% year
over year on strong international shipments in Europe. Revenue
per piece fell 5.2% year over year.
Supply Chain and Freight
segment revenues were down 0.7% year over year at $2,250 million.
Operating profit rose 6.9% year over year to $201 million.
Operating margin improved 60 bps year over year to 8.9%.
UPS generated free cash flow of $3.6 billion and spent $1.6
billion in the first nine months of the year. The company
repurchased 33 million shares worth $2.9 billion and paid
dividends of $1.7 billion.
The company maintained its 2013 adjusted earnings per share
estimate range of $4.65 to $4.85. This projection represents
year-over-year growth of 3% to 7%.
We believe that the booming health care segment, shipment and
yield growth along with productivity improvements will help UPS
to fuel profitability in the future. Moreover, the company's
strategic investments, technology-backed operations and enhanced
worldwide network will strengthen its market position and
safeguard shareholder value despite unfavorable market dynamics.
However, factors like labor unionization, competitive threats
from players like
Expeditors International of Washington Inc
) and economic upheaval continue to pose significant threats to
Zacks Rank & Other Picks
Currently, UPS holds a Zacks Rank #4 (Sell). Stocks that offer
value within this sector include
Radiant Logistics, Inc.
), which has a Zacks Rank #2 (Buy).
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UTD PARCEL SRVC (UPS): Free Stock Analysis
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