United Parcel Service, Inc.
) reported fourth quarter 2012 adjusted earnings per share of
$1.32, missing the Zacks Consensus Estimate of $1.38. However,
earnings per share registered growth of 3.1% from $1.28 in the
Adjusted earnings for the quarter exclude the impacts of a
non-cash $3 billion after tax charge for pension and retirement
benefits, arising from decline in discount rates. Adjusted
earnings for the year grew 4.1% year over year to $4.53 per
Total revenue for the quarter inched up 2.9% year over year to
$14,571 million but fell short of the Zacks Consensus Estimate of
$14,387 million. The year over year growth was driven by
improvement in freight pricing in both, ground and air products.
In the reported quarter, consolidated volume and average revenue
per piece respectively grew 2.9% and 1.4% year over year.
For the year 2012, total revenue increased 1.9% year over year to
$54,127 million. Volume and increased 3.2% year over year and
average revenue per piece remained flat year over year.
Total operating profit increased 1.2% year over year to $2,049
million. Operating margin fell 20 basis points (bps) year over
year to 14.1%. For 2012, total adjusted operating profit rose
2.9% year over year to $7,070 million, resulting in an operating
margin of 13.1%, up 20 bps year over year.
US Domestic Package
revenue rose 3.0% year over year to $8,933 million in the
reported quarter. Operating profit grew 4.4% year over year to
$1,378 million. Operating margin grew 20 bps year over year to
The margin expansion was driven by solid volume growth and
improved network efficiencies and higher base rates. Average
daily volume increased 3% on growth in online shopping. Revenue
per piece improved 1.7% year over year driven by higher rates.
revenue rose 1.5% year over year to $3,201 million. Operating
profit fell 1.2% year over year to $499 million in the reported
quarter and operating margin contracted 40 bps to 15.6%. Average
daily volume grew 2.2% year over year on strong international
shipments in Europe and Asia. Revenue per piece grew 0.9% year
Supply Chain and Freight
segment revenue rose 4% to $2,437 million. Operating profit
plunged 13.6% year over year to $172 million. Operating margin
contracted 140 bps year over year to 7.1%.
UPS generated free cash flow of $5.4 billion and spent $2.2
billion in 2012. The company repurchased 21.8 million shares
worth $1.6 billion at year-end 2012.
For 2013, UPS expects earnings per share in the band of
$4.80-$5.06, representing growth of 6-12% over 2012 adjusted
earnings. The company raised its share repurchase guidance for
2013 from $1.5 billion to $4.0 billion.
Besides UPS, another stock worth a look is
Air Transport Services Group, Inc.
), which carriers a Zacks Rank #2 (Buy).
Despite the challenging economic conditions, we remain encouraged
by UPS' continued productivity gains, improved operating profit,
and strong free cash flow position. Despite the failure of its
mega Dutch acquisition,
TNT Express N.V.
), the company remains focused on smaller acquisitions to expand
its footprint globally.
However, we remain concerned over the volatile economy
condition that continues to restrict market demand. Further, the
company is also exposed to unionized workforce and intense
competition from giants like
UPS retains a Zacks Rank #3 (Hold).
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UTD PARCEL SRVC (UPS): Free Stock Analysis
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