UPS’s first-quarter earnings report received a lukewarm response from Wall Street, with only one analyst giving the stock a positive rating. Despite beating expectations, UPS CFO Brian Newman’s guidance of a 40% decline in adjusted operating profit had set a low bar for the company. However, UPS reported only a 31.5% drop in adjusted operating profit, attributing the beat to improved delivery volume and cost-shifting.
Looking ahead, UPS management reiterated its full-year guidance and three-year financial targets. The company’s consolidated average daily volume only decreased by 3.2% year over year in the first quarter, showing signs of improvement. UPS is expected to benefit from increased revenue per piece from fuel surcharges and the lap of increased costs from last year’s Teamsters contract.
The company’s ongoing focus on relationships with small and medium-sized businesses and healthcare customers, as well as planned investments in technology, are expected to drive growth. Despite the positive outlook, UPS will need to navigate an uncertain volume environment as the industry adjusts to excess capacity built up during the pandemic.
Overall, UPS’s future looks promising, but investors should keep an eye on delivery volumes. The stock is considered attractive, but analysts recommend considering other investment opportunities. The Motley Fool’s Stock Advisor team has identified 10 stocks with potential for significant returns, excluding UPS. Investors are advised to research and consider all options before making investment decisions.