Why Is UPS (UPS) Up 0.8% Since Last Earnings Report?

United Parcel Service (UPS) reported Q2 earnings per share of $1.55, missing consensus by a penny and declining 13.4% year-over-year, despite revenues of $21.2 billion surpassing estimates. The company saw mixed segmental performance, with International Package revenues up 2.6% but U.S. Domestic Package and Supply Chain Solutions revenues declining, leading to overall operating profit contraction. Following the report, UPS shares have gained only 0.8%, underperforming the S&P 500, and the company cited macroeconomic uncertainty for not providing 2025 revenue or operating profit guidance. Analyst estimates have since trended significantly downward, resulting in a Zacks Rank #4 (Sell) and an expectation of below-average returns.

Analysis

United Parcel Service's second-quarter performance reveals significant underlying weakness despite a revenue figure of $21.2 billion that surpassed consensus estimates. The top-line beat masks a 2.7% year-over-year revenue decline and, more critically, a 13.4% drop in earnings per share to $1.55, which missed analyst expectations. An examination of segmental results highlights broad-based profitability challenges; the U.S. Domestic Package segment saw operating profit fall 1.4%, while the International Package segment experienced a severe 17.2% profit contraction despite a 2.6% revenue increase, indicating substantial margin pressure. The Supply Chain Solutions division also reported an 18.3% revenue decrease and a 13.1% profit drop. The company's decision to withdraw its 2025 revenue and operating profit guidance, citing macroeconomic uncertainty, has injected significant ambiguity into its future outlook. This has been followed by a sharp negative revision in consensus estimates, which have shifted downward by 15.64% post-earnings, culminating in a Zacks Rank #4 (Sell) and signaling expectations for below-average returns.

Key Decisions for Investors

• Investors should be cautious of a potential value trap, as the stock's 'B' grade for value is contrasted by 'D' grades for growth and momentum, alongside deteriorating fundamentals and a Zacks #4 (Sell) rating.
• Given the broad-based decline in operating profits and the withdrawal of 2025 guidance, it is critical to monitor for any shifts in the macroeconomic outlook and track the execution of the company's $3.5 billion cost-saving initiatives.
• While the affirmed dividend plan of approximately $5.5 billion may be attractive, this income stream should be weighed against the significant risk of capital depreciation, evidenced by the stock's 0.8% post-earnings gain which underperformed the S&P 500.