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Sticking With UPS

NEW YORK ( TheStreet) -- My heart skips a beat whenever the brown truck from United Parcel Service (UPS - Get Report) pulls up in front of my house to deliver a package. As more and more consumers order everything from books to food to electronic devices online, UPS appears poised to sustain and grow its lucrative business.

Yes, I'm aware the company said last Friday it anticipates fourth-quarter 2013 diluted earnings per share of $1.25. Full-year 2013 adjusted diluted earnings per share are expected to be $4.57, below the previous guidance of $4.65 to $4.85. On a reported basis, 2013 diluted earnings are expected to be $4.61 per share. This information came from the company's investor relations Web site, which I encourage you to peruse.

The financial results in the U.S. were negatively affected by the combination of a shortened peak shopping season and an unprecedented level of online shopping that included a surge of last-minute orders. In an effort to maintain service standards and commitments, UPS deployed additional equipment and people. For example, the company utilized 85,000 temporary employees, 30,000 more than planned. Also, December weather had an effect and hurt earnings results.

That's a good part of the reason the stock price has corrected from its Dec. 31 high of $105.37 to Tuesday's intra-day low of $97.54. For you home-gamers that's a 7.42% correction, and who knows if the price might correct a little more before resuming an upward trajectory. UPS shares closed Tuesday at $98.57, down 6.2% for the year to date.

How Many Packages Can UPS Deliver Two Days Before Xmas?

To give us a sense of the capacity that UPS can handle during its highest seasonal delivery requirements, I  visited its Web site. I learned that on Dece. 23, UPS delivered more than 31 million packages, the most ever and 13% over the prior-year peak day. This year's highest delivery day occurred six days later than anticipated and was 7.5% greater than the company had prepared for. No wonder it needed to hire so many temporary workers.

As an analyst, I'll cut UPS some slack on lowering its guidance for its fourth-quarter EPS. Despite its fourth-quarter challenges and results, the company is confident of its 2014 outlook. UPS expects full-year 2014 diluted earnings per share to grow in line with its long term targets of 10% to 15%, compared to 2013 adjusted results. Further details will be provided when the company releases earnings on Jan. 30.

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