UPS Beats Street Estimate, Earns 71 Cents in First Quarter

Posted Apr 27th 2010 3:40PM by Joseph Lazzaro
Filed under: Earnings Reports, United Parcel'B' (UPS), Stocks to Buy

If you're an investor in United Parcel Service (UPS) or an investor at-large, you have to like UPS's first quarter, during which the bellwether company earned 71 cents per share (excluding one-time items), well above the Thomson/Reuters First Call first quarter consensus estimate of 58 cents.

UPS also confirmed its 2010 earnings guidance of $3.05 to $3.30 per share, compared to the First Call estimate of $3.16. Those surveyed by First Call also expect UPS to earn $3.79 in 2011. UPS earned 52 cents per share a year ago, in the first quarter of 2009.

UPS's shares initially rose about 3% in Tuesday morning trading on the news, then got caught in the market's downdraft on concerns about the aid package for Greece, with the shares down $1.45 to $67.07 at mid-day.

UPS reported first quarter revenue of $11.73 billion, in-line with the First Call estimate of $11.77 billion.

Stock Analysis: UPS's results bode well for the stock and for the U.S. economic recovery. Domestic shipments edged 0.4% higher in the first quarter -- the first increase in more than two years. Meanwhile, international package revenue jumped 18%.

UPS is considered a bellwether because when its package deliveries rise, that usually implies higher revenue and a stronger performance by the companies who send those packages. First discussed on April 7, 2009 at a price of $51.28, I still like UPS's shares here. Technically, UPS stock chart is strong: the stock will encounter modest resistance at $70, but the calculation here is that the uptrend is stronger and will prevail. I'd put a sell/stop loss at $33.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: UPS