Operating in over 220 countries, United Parcel Service, Inc. (NYSE: $UPS) has grown into a global shipping and supply chain management leader since its founding in 1907. With a massive fleet surpassing 500 planes and 100,000 vehicles, UPS delivers around 25 million packages worldwide daily.
UPS embraces a “better, not bigger” mindset, focusing on innovative solutions for healthcare, small businesses, and international markets while staying committed to sustainability and community development. UPS has transformed into a worldwide shipping empire that boasts global operations and delivers millions of packages daily.
On Tuesday, United Parcel Service reported fourth quarter 2023 revenue that fell short of projections. UPS also issued 2024 guidance substantially below analyst forecasts for the year ahead.
Revenue and Earnings Fall Short of Estimates
UPS disclosed consolidated revenue of $24.9 billion for Q4 2023, a 7.8% year-over-year decrease. For 2023, UPS reported revenue of $91.0 billion, down 9.3%.
In Q4 2023, UPS posted a consolidated operating profit of $2.5 billion, a 22.5% drop versus Q4 2022. Adjusted operating profit declined 27.1%. For 2023, UPS recorded an operating profit of $9.1 billion and adjusted operating profit of $9.9 billion, a 28.7% decrease.
Q4 2023 diluted EPS was $1.87. Adjusted diluted EPS of $2.47 declined 31.8% year-over-year. Analysts predicted Q4 EPS of $2.46 on revenue of $25.4 billion. The full-year 2023 diluted EPS was $7.80, while adjusted diluted EPS was $8.78.
The 2023 operating margin was 10.0%, with an adjusted margin of 10.9%. Adjusted return on invested capital was 21.9%. UPS generated $10.2 billion in cash flow and $5.3 billion in free cash flow.
UPS Forecasts $92-94.5 Billion
UPS provides adjusted guidance given the difficulty in predicting impacts like pension changes. It allows insights while acknowledging forecasting challenges.
For 2024, UPS expects revenue of $92-94.5 billion, below the $95.57 billion consensus. Adjusted operating margin is projected at 10-10.6%. UPS plans $4.5 billion in capital expenditures and $$5.4 billion in dividends, pending approval. The tax rate is expected at 23.5%.
UPS Stock Falls on Weak Outlook
On Tuesday, UPS stock dropped 9.2% to $144.71 after slipping 0.8% on Monday. January gains stand at around 0.5% so far. The trading range is $144.58 to $149.50, with a market cap of 123.31B.
Analyst Recommendations: Buy or Hold UPS?
Per 12 analysts, the average 12-month UPS price target is $172.08. High and low forecasts are $202 and $150. It implies 18.36% upside from $145.39. Six analysts recommend buying, while six suggest holding. UPS is hiking its quarterly dividend by 1 cent to $1.63 per share in Q1 2024. It coincides with plans to cut 12,000 jobs to save $1 billion.
Despite recent stumbles, UPS retains long-term potential through its operations, networks, and strategic initiatives. Investors may be rewarded for exercising patience during periods of economic volatility.
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