UPS Reports Stellar Quarterly Beat; Shares Surge 6.8%

United Parcel Services (UPS) shares jumped 6.8% on Tuesday to close at $218.07 after the company delivered better-than-expected third-quarter results driven by robust performances across all regions.

Markedly, shares of the global package delivery company have gained 27.7% over the last year. (See United Parcel stock charts on TipRanks)

Adjusted earnings of $2.71 per share grew 18.9% year-over-year and beat analysts’ expectations of $2.54 per share. 

Further, revenues jumped 9.2% year-over-year to $23.2 billion and exceeded consensus estimates of $22.56 billion. The top line benefitted from sales growth in U.S. operations, which soared 7.4%. Moreover, International revenues jumped 15.5%, with robust growth reported across all regions.

On top of this, consolidated operating profits improved 22.6% year-over-year to $2.9 billion.

UPS CEO Carol Tomé commented, “The actions we are taking under our better not bigger strategic framework to improve revenue quality, enhance productivity and remain disciplined on capital allocation are driving our positive financial performance.”

Based on robust Q3 results, management boosted its expectations for consolidated adjusted operating margins to 13.0%. Furthermore, it forecast an adjusted return on invested capital to be approximately 29%.

Following the strong Q3 results, Goldman Sachs analyst Jordan Alliger reiterated a Buy rating and a price target of $237 (8.7% upside potential) on the stock.

Alliger commented, “We are encouraged by the performance on domestic profitability – especially around the margin percent which we sense is the key focal point for investors. The ~80 bp beat after deflated expectations going into the quarter should bode well for that shares.”

Consensus among analysts is a Moderate Buy based on 7 Buys and 3 Holds. The average United Parcel price target of $220.44 implies 1.1% upside potential to current levels.

UPS scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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