S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Warning: Biden’s Big Blackout is Coming (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Laser breakthrough could send stock soaring 2,476% (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
Is C3.ai Artificial Intelligence Product Suite a Gamechanger?
Laser breakthrough could send stock soaring 2,476% (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Warning: Biden’s Big Blackout is Coming (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Laser breakthrough could send stock soaring 2,476% (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
Is C3.ai Artificial Intelligence Product Suite a Gamechanger?
Laser breakthrough could send stock soaring 2,476% (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Warning: Biden’s Big Blackout is Coming (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Laser breakthrough could send stock soaring 2,476% (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
Is C3.ai Artificial Intelligence Product Suite a Gamechanger?
Laser breakthrough could send stock soaring 2,476% (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Warning: Biden’s Big Blackout is Coming (Ad)
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
Laser breakthrough could send stock soaring 2,476% (Ad)
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
Is C3.ai Artificial Intelligence Product Suite a Gamechanger?
Laser breakthrough could send stock soaring 2,476% (Ad)
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders

Be Sure You Own United Parcel Service for the Right Reasons

Key Points

  • United Parcel Service (UPS) looks fairly priced after earnings. 
  • The shipping company was a pandemic winner, but growth is regressing to historical averages.  
  • If you want to own UPS stock you should look at it for value, not growth.  
  • 5 stocks we like better than United Parcel Service
Be Sure You Own United Parcel Service for the Right Reasons

Some earnings reports are more significant than others. And that’s the sense that you got when United Parcel Service (NYSE: UPS) reported earnings on October 25, 2022. UPS stock dropped sharply after Federal Express (NYSE: FDX) delivered a warning of sharply lower shipping volumes based on the global economic slowdown. 

With that in mind, investors were looking for evidence of that slowdown in United Parcel Service’s earnings. And what they got was a mixed result. UPS scored a beat on the bottom line posting earnings per share (EPS) of $2.99 as opposed to analysts’ estimates of $2.85 EPS. But revenue was a slight miss coming in at $24.16 billion, just below the forecast for $24.32 billion. 

So how should investors think about the UPS earnings report as they consider whether to own UPS stock? That’s a question this article will attempt to answer. 

Growth is Still Good, But Not as Good 

Companies such as United Parcel Service and Federal Express in addition to, of course, Amazon (NASDAQ: AMZN) were winners as the pandemic changed shopping habits. All three companies could be considered essential businesses as people were sheltering in place.  

That growth continued even as the economy began to reopen. Not surprisingly, the company was posting double-digit increases in revenue between 2020 and 2021. And let’s be clear, the results that UPS delivered suggest that business is still strong. Revenue continues to grow on not only a sequential but a year-over-year (YOY) basis. The move to e-commerce is real and is not going away.  


There are indications, however, that revenue growth may be peaking. Few investors could expect the company to continue to post double-digit gains, And sure enough, revenue growth is back to single-digit levels, which is comparable to the company’s historical gains.  

Earnings May Come Under Pressure 

And that is likely to put pressure on earnings. For now, the company is managing to pass along costs to the consumer to make up for a decline in shipments. However, there’s no telling what the consumer’s breaking point may be. And that may be decided by retailers as well who may have no choice but to entice consumers with offers for free shipping.  

Chief Executive Office Carol Tome acknowledged as such when she remarked about the uncertain economic outlook, “We’re going to build more agility to our plan than we’ve seen before. We have to be able to turn on a dime.” 

To that end, the company is continuing to invest in automation as an opportunity to reduce costs. If those efforts are successful, Tome told analysts the company would consider passing those savings to its customers. 

UPS is Becoming What it Always Was 

Even with the contracts that UPS has with companies, the business model becomes a commodity. And that’s likely to become evident as the world navigates through this recession.  

In the short term, it’s not irrational to see the company having a strong quarter to end the year. The current quarter is typically the company's strongest quarter. And with retailers having little choice but to offer discounts, the holiday season may be stronger than expected. 

But when I look at the UPS stock chart, I see that the pandemic has been a huge anomaly. There’s nothing wrong with anomalies. And undoubtedly some investors made a nice profit. However, this looks like a time when the market may have UPS stock priced correctly.  

That’s why I say investors should buy UPS stock for the right reasons. And that would be for steady revenue and earnings – and a dividend that currently has a 3.60% dividend yield. For investors looking to stay in the market but mitigate their risk, that dividend could be a nice gift they give to themselves.  

Should you invest $1,000 in United Parcel Service right now?

Before you consider United Parcel Service, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and United Parcel Service wasn't on the list.

While United Parcel Service currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
United Parcel Service (UPS)
2.2836 of 5 stars
$191.66+0.2%3.17%14.52Hold$195.48
FedEx (FDX)
2.7482 of 5 stars
$214.67+0.1%2.14%16.86Moderate Buy$210.12
Amazon.com (AMZN)
3.0464 of 5 stars
$103.39-8.4%N/A-385.77Moderate Buy$144.87
Compare These Stocks  Add These Stocks to My Watchlist 

Chris Markoch

About Chris Markoch

Contributing Author: Retirement, Individual Investing

Chris Markoch is a freelance financial copywriter with over five years of experience covering various aspects of the financial markets. You may find his writing a little different than other stock articles you’ve read. And that’s OK with him. Chris doesn’t have a traditional finance background. What he does bring to the table is a strong business and marketing background having worked for agencies that serviced Fortune 500 companies. With that in mind, he isn’t overly impressed with what companies say, and more focused on what they do. And because buyer behavior dictates so much of what happens with a stock, Chris always keeps the end consumer close in mind. Chris has been writing for MarketBeat since 2018.

Contact Chris Markoch via email at CTMarkoch@msn.com.

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