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On November 4, UPS appointed Shannon Eisenhardt to its board of directors and its audit committee, which oversees the company's financial reporting and internal controls. Eisenhardt currently serves as the finance chief for Reckitt Benckiser and previously held senior finance roles at Nike. While adding a director with deep experience in global consumer brands and finance is a positive step for board oversight, it does not change the company's day-to-day operations or its long-term strategy. For most investors, this is a routine governance update rather than a reason to change your view on the stock.
Source: 8-K filing
Oil prices fell on news of diplomatic efforts to ease conflict in the Middle East. For a company like UPS that operates a massive fleet of planes and trucks, fuel is one of the largest single costs.
While the company uses fuel surcharges to pass costs to customers, those adjustments often lag behind real-time price moves. A sharp drop in oil prices typically helps margins in the short term and makes shipping more affordable for the businesses that use its network. This is particularly helpful now as the company works to offset higher labor costs from its recent union contract.
Source: WSJ
After UPS reported its October results, we raised our quality score to 4.0. We increased our growth ratings for both total sales and the company's ability to handle changes from artificial intelligence. We added the exclusive returns partnership with TikTok Shop and the automation of 90% of international customs clearances to what we track. We also added the risk of rising fuel and diesel prices to our thesis and updated our projections for revenue per package.
UPS reported adjusted earnings of $1.69 per share, beating the $1.62 analysts expected. Revenue grew about 7 percent to $22.9 billion. The company is seeing success in its plan to prioritize higher-paying packages, such as healthcare supplies and international air shipments, rather than simply chasing the highest possible number of deliveries.
Management raised its full-year revenue target to $92.6 billion and increased its profit expectations. This is a positive sign that the company is successfully managing the higher labor costs from its recent union contract. By using more automation in its sorting centers and focusing on specialized shipping, UPS is proving it can grow its margins even in a competitive market.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Evercore ISI lowered its price target for the company from $118 to $107 on Tuesday. This change comes just a week before the company is set to report its latest quarterly results. Even with the lower target, the firm still sees the stock as worth more than its current price of about $100. The average target across all analysts who follow the company sits a bit higher at $117.
Source: Evercore ISI
Management has beat their own profit targets for seven of the last eight quarters. This pattern shows they set a bar they know they can clear, making their forecasts very reliable.
| Expectation | |
|---|---|
| EPS | $2.76 |
| Revenue | $25.71B |