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NEW YORK (TheStreet) -- Shares of United Parcel Service  (UPS) - Get United Parcel Service, Inc. Class B Report are tanking, sharply down 9.5% to $103.40 in early market trading Friday, after the company issued a warning on its profits for the fourth quarter.

The shipping giant disclosed that its fourth quarter adjusted EPS is now expected to be $1.25, below the consensus forecast of $1.47.

UPS said package volume and revenue were as expected, but operating costs were higher than it forecast.

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The company plans to reduce operating costs and implement new pricing strategies during peak season going forward.

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UPS now expects 2015 diluted earnings per share growth to be slightly less than its long-term target of 9% to 13%.

Separately, TheStreet Ratings team rates UNITED PARCEL SERVICE INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate UNITED PARCEL SERVICE INC (UPS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, growth in earnings per share, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • UPS's revenue growth has slightly outpaced the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • UNITED PARCEL SERVICE INC has improved earnings per share by 13.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITED PARCEL SERVICE INC increased its bottom line by earning $4.62 versus $0.80 in the prior year. This year, the market expects an improvement in earnings ($4.96 versus $4.62).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Air Freight & Logistics industry and the overall market, UNITED PARCEL SERVICE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • Net operating cash flow has increased to $2,359.00 million or 44.81% when compared to the same quarter last year. Despite an increase in cash flow, UNITED PARCEL SERVICE INC's average is still marginally south of the industry average growth rate of 48.99%.
  • You can view the full analysis from the report here: UPS Ratings Report

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