Why UPS (UPS) Is Falling Today

NEW YORK (TheStreet) -- UPS (UPS) fell 1.9% to $98.58 Friday after the shipping company issued weaker-than-expected fourth-quarter guidance.

The company expects quarterly earnings of $1.25 a share, compared to the Capital IQ Consensus Estimate of $1.43 a share. UPS also lowered its full-year EPS guidance to $4.57 a share from between $4.65 and $4.85 a share.

UPS says the U.S. results were negatively impacted by the shorter-than-usual peak holiday season paired with record levels of online shopping. The firm tried to meet the demand in several ways, including hiring 85,000 temporary workers, 30,000 more than originally planned. Weather was also a factor in the results.

UPS also delivered weaker-than-expected guidance for 2014 that see EPS raise between about 10% and 15% to between $5.03 and $5.26 a share. Capital IQ Consensus estimates EPS of $5.49 a share for 2014.

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

"We rate UNITED PARCEL SERVICE INC (UPS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, good cash flow from operations, solid stock price performance and growth in earnings per share. 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:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Air Freight & Logistics industry. The net income increased by 133.9% when compared to the same quarter one year prior, rising from $469.00 million to $1,097.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $1,629.00 million or 30.00% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 12.15%.
  • Powered by its strong earnings growth of 141.66% and other important driving factors, this stock has surged by 32.62% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • UNITED PARCEL SERVICE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNITED PARCEL SERVICE INC reported lower earnings of $0.80 versus $3.83 in the prior year. This year, the market expects an improvement in earnings ($4.75 versus $0.80).

If you liked this article you might like

Time to Sell UPS Stock and Buy FedEx Instead?

Time to Sell UPS Stock and Buy FedEx Instead?

Why Activist Investors Won't Target UPS Even After Lackluster Results

Why Activist Investors Won't Target UPS Even After Lackluster Results

UPS's Long-Tenured Board Members Are a Red Flag for Investors

UPS's Long-Tenured Board Members Are a Red Flag for Investors

These Were the 3 Hottest Stories on Wall Street Tuesday

These Were the 3 Hottest Stories on Wall Street Tuesday

These Are the Hottest Stories on Wall Street Tuesday

These Are the Hottest Stories on Wall Street Tuesday