Shares of United Parcel Service, Inc. (UPS) recorded a new all-time high of $233.72 after delivering stellar fourth quarter and full-year fiscal 2021 results on the heels of a solid holiday season and economic recovery.
UPS is the world’s largest logistics solutions provider across 220 countries and territories. Q4 earnings and revenues both surpassed expectations by a huge margin, and the company also provided an upbeat FY22 outlook. Shares closed up 14.1% at $230.69 on February 1, following the results.
Stellar Q4 Results
UPS Q4 adjusted earnings jumped 35% year-over-year to $3.59 per share, and came in 50 cents higher than analyst estimates of $3.09 per share.
Moreover, consolidated revenues of $27.77 billion outpaced Street estimates of $27.01 billion, and increased 11.5% compared to the same period last year. The robust revenue growth was aided by a 10.5% rise in revenue per piece in the U.S. Domestic segment and a 16.4% jump in revenue per piece in the International segment.
The UPS Board also hiked up the quarterly cash common dividend by 49% year-over-year to $1.52 per share. The dividend is payable on March 10 to shareholders on record as of February 22.
For full-year 2021, consolidated revenues climbed 15% annually to $97.29 billion and adjusted earnings were $12.13 per share.
CEO Comments
UPS CEO, Carol Tomé, said, “I want to thank all UPSers for their outstanding efforts throughout the holiday season and for once again delivering industry-leading service to our customers… The execution of our strategy is delivering positive financial results and driving strong momentum as we move into 2022.”
FY2022 Outlook
Based on the continued business momentum, UPS forecasts FY22 consolidated revenues of $102 billion better than the consensus estimate of $100 billion.
The company does expect the supply chain issues to continue well into 2022 and pricing is expected to remain intact. Despite these challenges, UPS expects to meet its 2023 consolidated revenues and operating margin targets one year in advance.
Additionally, FY22 adjusted operating margin is expected at 13.7% and adjusted return on invested capital is projected to be above 30%. Capital expenditure is projected at $5.5 billion, dividend payments are expected to be around $5.2 billion, while share buybacks of at least $1.0 billion are projected, subject to Board approval.
Target Price
Responding to the results, Goldman Sachs analyst Jordan Alliger reiterated a Buy rating on the stock and a price target of $248, which implies 7.5% upside potential to current levels.
Overall, the stock has a Moderate Buy consensus rating based on 5 Buys and 3 Holds. The average United Parcel Service price target of $230.43 implies that shares are almost fully valued at current levels. Shares have gained 43.9% over the past year.
Blogger Opinions
TipRanks data shows that financial blogger opinions are 94% Bullish on UPS, compared to a sector average of 71%.
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