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United Parcel (UPS) Beats Earnings, Revenue Estimates in Q2

United Parcel Service, Inc. UPS reported second-quarter 2017 earnings of $1.58, beating the Zacks Consensus Estimate of $1.46 per share. Earnings increased 11% on a year-over-year basis. Results were aided by higher revenues.

Revenues improved 7.7% to $15,750 million from the year-ago quarter, beating the Zacks Consensus Estimate of $15,477.3 million. The upside was driven by growth across all the key segments of the company.

Segmental Details

U.S. Domestic Package revenues climbed 8.1% year over year to $9,745 million in the reported quarter, driven by e-commerce growth. Segmental operating profit improved 13.1% to $1,395 million.

Segmental average daily package volumes increased 4.9%, driven by a 4.2% rise in Ground products and 6.4% growth in Next Day Air services. Deferred Air products were up 11%. Average revenue per piece was up 3%.

International Package revenues improved 2.8% to $3,163 million, despite the adverse impact of foreign currency. Export shipments rose 12% in the quarter on the back of growth in Europe and Asia.

However, segmental operating profits decreased 4.9% to $583 million in the quarter. The measure came in at $697 million on a currency neutral basis. Revenue per piece declined 2.3%.

Supply Chain and Freight revenues increased 12% to $2,842 million. Segmental results were aided by the acquisition of Coyote Logistics, which was completed in the third quarter of 2015. Operating profits in the segment climbed 24% to $238 million in the reported quarter.

Other Details

United Parcel has spent $2 billion as capital expenditure in the first six months of the year. Moreover, the company paid approximately $1.4 as dividend to shareholders in the first half of 2017. It also bought back 8.4 million shares for more than $900 million.

In fact, the company’s efforts to reward shareholders consistently through buybacks and dividend payouts are impressive.

United Parcel Service, Inc. Price, Consensus and EPS Surprise

 

United Parcel Service, Inc. Price, Consensus and EPS Surprise | United Parcel Service, Inc. Quote

Outlook

United Parcel carries a Zacks Rank #4 (Sell) company. It still expects 2017 adjusted earnings per share in the band of $5.80 to $6.10, which includes $400 million of pre-tax currency headwinds. Foreign currency related headwinds are also expected to hurt 2017 results. The Zacks Consensus Estimate for 2017 is currentlypegged at $5.95 per share. Tax rate of 35% is projected for the latter half of 2017.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Transportation space are keenly waiting for second-quarter earnings reports from key players like American Airlines Group, Inc. AAL , Copa Holdings, S.A. CPA and Air Lease Corp. AL . While American Airlines is scheduled to report second-quarter results on Jul 28, Copa Holdings and Air Lease will report the same on Aug 9 and Aug 3, respectively.

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Copa Holdings, S.A. (CPA): Free Stock Analysis Report
 
American Airlines Group, Inc. (AAL): Free Stock Analysis Report
 
Air Lease Corporation (AL): Free Stock Analysis Report
 
United Parcel Service, Inc. (UPS): Free Stock Analysis Report
 
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