UPS Q4 Earnings: Will E-commerce Growth Beat Headwinds?
Zacks Investment Research | Jan 27, 2019 08:41PM ET
United Parcel Service, Inc. (NYSE:UPS) is scheduled to report fourth-quarter 2018 results on Jan 31, before the market opens.
Last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate. However, the bottom line improved substantially on a year-over-year basis. Meanwhile, revenues outpaced the Zacks Consensus Estimate and also increased significantly year over year. Results were aided by strong e-commerce growth.
Let’s see how things shape up for this announcement.
Factors Likely at Play
Similar to the last few quarters, solid e-commerce growth is likely to aid results in the fourth quarter as well. The company’s impressive show during the recent holiday season can be evidenced by the year-over-year improvement in on-time performance with respect to shipments.
Expanded package volumes at the U.S. Domestic Package segment are anticipated to boost segmental results. Notably, the Zacks Consensus Estimate for fourth-quarter U.S. Domestic Package revenues stands at $12,495 million, higher than $11,835 million a year ago.
Additionally, robust growth in export volumes is expected to boost results in the International Package segment. The Zacks Consensus Estimate for fourth-quarter International Package revenues is pegged at $3,826 million, above the year-ago reported figure of $3,753 million.
However, on a cautionary note, the company has been making significant investments in facility upgrades to meet the surge in demand following rapid e-commerce growth. The high capital expenditures might affect bottom-line growth in the to-be-reported quarter. Additionally, escalated delivery costs might further hamper earnings.
Moreover, UPS’ freight division is likely to witness a sluggish performance in the fourth quarter as revenues in the Supply Chain and Freight segment have been partly affected in early November due to a labor deal spat with its freight workers. The Zacks Consensus Estimate for freight revenues at the Supply Chain and Freight segment stands at $823 million, lower than $867 million reported in the third quarter of 2018.
United Parcel Service, Inc. Price and EPS Surprise
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