United Parcel Service Inc. (UPS) - Get United Parcel Service, Inc. Class B Report shares fell Thursday, Feb. 1, despite posting a top- and bottom-line beat for the fiscal fourth quarter as holiday shipping costs curbed profit growth.
The Atlanta-based company reported a net income of $1.1 billion, or $1.27 on a per share basis, compared to a loss of $239 million, or 27 cents per share, during the same period last year. Adjusted earnings of $1.67 per share beat estimates by a penny, while revenue of $18.83 billion topped forecasts calling for $18.19 billion.
For the full-year, the shipping giant posted adjusted earnings of $6.01 on revenue of $65.87 billion.
Despite topping estimates, shares of UPS fell 7.1% to $118.19 at 9:30 a.m. EST. The stock had fallen by as much as 7.5% in premarket trading.
UPS, which is often seen as a leading indicator for consumer spending, said it delivered 1.5 billion packages in the quarter, a 5.7% increase from the prior year.
To be sure, the company said shipments surged beyond network capacity during the holiday season, costing about $125 million. Investments in new technology, customer solutions, and automated capacity expansion also cost about $60 million.
For the year ahead, UPS forecasts adjusted earnings in the range of $7.03 to $7.37 per share. Capital expenditures are expected to be between $6.5 billion and $7 billion, which will mostly be dedicated to investments in new technology, aircraft, and automated capacity, the company said.
"The strong economic outlook and UPS's high return on invested capital generates a unique opportunity to create additional long-term value by increasing capital investments," Chief Financial Officer Richard Peretz said in a statement. "These investments enable UPS to execute our strategy, and we are well-positioned for 2018 and beyond."
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