UPS (UPS) Stock Higher After Earnings and Asian Export Increase
Shares of United Parcel Service Inc. (UPS: Charts, News) closed up + 2.17 or +3.03 percent to $73.73 per share on Tuesday, after the company reported a 56 percent drop in third quarter profits and warned of "some uncertainty" in the strength of the economy for the upcoming holiday shopping season.
The stock's rally was attributed in part to news that the company's Asian export business had increased by two percent in the quarter. In addition, UPS reported that European exports had increased one percent while U.S. domestic shipments rose 3.7 percent. Daily Chart
Sandy Springs, Georgia based United Parcel Service Inc. is the largest package delivery company in the world and a global leader in supply chain management. Founded in Seattle, Washington as a private messenger and delivery service in 1907, the company delivers over 15 million packages to more than 6 million customers every day. For the company's third quarter, net income came to $469 million, or $0.48 per share, versus $1.07 billion or $1.09 per share in the same period one year ago, a drop of 56 percent. The number included an after-tax, non-cash charge of $559 million for the restructuring of pension liabilities. Sales also declined by -0.7 percent to $13.1 billion, the first time sales have declined since the company's fourth quarter of 2009. Earnings per share came to $1.06 for the quarter, while profits for the full year were narrowed to a range of $4.55-$4.65 from a previous range of $4.50 to $4.70. In a conference call after the earnings release, Chairman and CEO D. Scott Davis stated that, "The lack of clear direction on future tax and spending policy has and will continue to slow business investment. This will clearly impact the B2B small package market. Regardless of the outcome in November, the U.S. is on the edge of a fiscal cliff, and there is concern whether our politicians can reach an agreement that solves these issues." In addition to addressing the weak economic situation in the United States, CEO Davis also said that the company still expects to complete its acquisition of Dutch competitor, TNT Express NV (TNTEY
) by sometime "early next year." The merger was blocked by the European Commission that sent the company a formal Statement of Objection, citing the deal would reduce the number of major European parcel delivery companies from four to three. Davis stated that, "This is not uncommon. We're evaluating this confidential document and will respond in due course." The merger agreement - worth 5.16 billion - was struck in March and was expected to close in the third quarter, but has been postponed several times pending regulatory approval. During the upcoming holiday season, UPS expects to ship over 500 million packages, which could be optimistic with the current state of the economy. Nevertheless, much of the adverse news for UPS appears to already be priced into the stock, given Tuesday's increase. Other News About UPS European Regulators Object to UPS Takeover of TNT
Article on objections from the European Commission on the proposed merger. UPS Says Online Shoppers Driving Biz
Online customers expected to help company's bottom line. Other Stocks in the News Apple IPad Mini Debut Leaves Rivals Room to Undercut Price
Apple unveils smaller, thinner iPad leaving competitors room to sell their tablets cheaper. Facebook Posts a Loss But Makes Gains on Mobile Ad Revenue
Mobile advertising revenue mitigates third quarter loss. Copyright 2012 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.
Published on Oct 24, 2012
By Jay Hawk