United Parcel Service Inc. (NYSE: UPS) lowered its Q2 guidance just under a month ago amid worries that high increases in fuel costs would shave a bit off its earnings, which is coming up this Monday. While the company is still expected to post an EPS figure of $0.82 for its second quarter, this would be an 18% drop from the year-ago period. Its stock has recently hit a 52-week low, but then again, a recent analyst upgrade has the shares rallying a bit to offset that low.Although fuel costs are affecting just about any company involved in transportation, the business and consumer shipping industry is still apparently going decent even in a downbeat economy. UPS said that package volume was being negatively affected by the U.S. economy, though -- and this is having an effect on international package volume as well. It's not that businesses and consumers have stopped shipping -- perhaps they are delaying shipping or forgoing it together on some items.
UPS did say that its Supply Chain and Freight segment was expected to outdo expectations for the second quarter, which will be a nice bright spot for the company. So, I have to ask: have you stopped ordering products (as a business or consumer) that require shipping? That is what UPS is implying with the statement it came out with on June 23rd when it lowered Q2 guidance. My bet -- UPS will earn $0.80 per share, even lower than its lowered guidance. What's your call?
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Reader Comments (Page 1 of 1)
7-17-2008 @ 10:36PM
Carlos said...
ups is downplaying its profit on purpose because it is buying back is own stock and hoping it drops even lower to buy it back lower. ups is too smart for the average stock buyer. now is the time to buy ups.
7-18-2008 @ 5:22AM
s said...
I'm still buying online, in fact more so now that gas prices are high. It saves me time and money, and often has free shipping, so I search those deals out. I also can find deals online that the local stores can't beat. The UPS guy brings it right to my door, the gas stays in my tank and I have more time to spend with family doing what I like. In this economy it makes more sense to have it delivered for free. No brainer!
7-18-2008 @ 1:41PM
Tim T. said...
Brian -- UPS will make the revised earnings. Please explain how you arrived @ $0.80 per share. Bet you just pulled it out of the air!! -Tim
7-18-2008 @ 11:57AM
Brian said...
Hi Tim,
The link to Zacks is where I derive my $0.80 EPS suggestion. I just didn't think UPS could hit the $0.82 figure, so I went down a few cents.
7-31-2008 @ 5:29PM
BigEd said...
remember UPS is really not a public company, they only put 10% out to the public.