UPS (UPS) Delivers on Strong Q1, Should You Buy After Sell-Off?

Trade UPS Shares Your Capital Is At Risk
Ollie Martin
Updated: 26 Apr 2022

Key points:

  • Following from a weaker FedEx quarter, investors were relieved to see UPS beat on both top and bottom lines
  • UPS reported a $3.03 per share and revenue of $24.4B
  • Company reaffirms guidance and unveils plans to double its annual share buyback to around $2B

Postal service UPS (NYSE: UPS) announced its Q122 earnings this morning, and to the relief of anxious investors, delivered on solid financials. Buyers have been acting with caution after a poorer-than-expected update from rival FedEx, who missed earnings expectations due to covid-linked pilot shortages.

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It seems, however, that this wasn’t reflective of the wider sector. Not only did UPS beat Q1 consensus, the company reaffirmed its FY profit forecast and unveiled plans to double its annual share buybacks to around $2B. UPS shares are currently trading at a premarket gain of 1.5%. 

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UPS Q1 earnings were pegged at $3.03 per share, ahead of the $2.88 Street consensus and 9.4% up from the same period last year. The company also demonstrated solid topline growth, with revenue rising 6.5% to $24.4B, again topping expectations of $23.8B. Domestic segment revenue grew a further 8% to $15.1B, whereas international revenues grew 13.1% to $5.4B.

Looking forward, on the grounds of a shining quarter, UPS had no reason not to reaffirm its revenue guidance of more than $102B, with expected earnings around $14B. The company also expects to deliver on operating margin and sales targets one year early, hitting numbers originally set for 2023. 

UPS CEO Carol Tomé expresses her gratitude:

“I want to thank all UPSers for their outstanding efforts during a challenging first quarter to serve the needs of our customers” 

Adding…

“The agility of our network and the continued execution of our strategy delivered another quarter of strong financial performance, putting us on our way to achieving our 2022 consolidated financial targets.”  

UPs shares sold off heavily as a trickle down effect of FedEx weaker earnings, dropping around 15% as nervous investors saw forthcoming fed flags. However, with today’s positive outlook, investors should be looking to buy into the now attractively-priced shares.

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