Conservative · Stocks to Consider and Updates

UPS Reports In Line; Hikes Low-End of Guidance

Earnings at United Parcel Service Inc. (NYSE: UPS – $120.22) fell slightly for the third quarter as higher costs from expanding Saturday package delivery and recent natural disasters weighed on its U.S. business. Net income was $1.26 billion, or $1.45 a share, down 0.7% from the year-ago period, but in line with analysts’ expectations. Revenue, excluding currency impacts, rose by 7% to $15.98 billion, a tad better than analysts were predicting at $15.62 billion. Operating expenses were up 8.1%. Average revenue per shipment rose 2.8% to $10.78. The results come just a day after the company announced it would increase U.S. shipping rates as it attempts to recoup the higher costs associated with e-commerce shipments. The rate hike is slated to go into effect Dec. 24.

       UPS also said it is offering an online service that helps small and medium-sized e-commerce businesses manage the return of goods purchased online; a costly, competitive and critical aspect of the business. The company aims to make the logistics of product returns easier for both online shoppers and business customers, and encourages businesses to use UPS for both outbound packages and processing returns.

       The world’s largest package delivery company raised the low-end of its earnings outlook for the year by a nickel ($5.85 to $6.10 a share) and within the $6.01 Street consensus. Analysts are looking $6.49 next year. UPS continues to invest in the operational and consumer technologies and facility improvements that enable the company to deliver during the holiday season, which is expected to be at record levels once again. UPS also plans to employ 95,000 temporary seasonal workers for the all-important fourth quarter. The shares, yielding 2.8%, can continue to be held in a conservative portfolio.

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