Conservative · Stocks to Consider and Updates

UPS Beats on Sales and Earnings; Guidance Disappoints

Shares of package delivery provider United Parcel Service (NYSE: UPS – $118.81) are falling about 7% in today’s trading, despite an earnings beat. The company’s fourth quarter net profit was boosted by growth in deliveries in the U.S. and abroad and benefits from changes to the new U.S. tax law. Atlanta-based UPS finished the year with net income of $1.1 billion and adjusted earnings per share of $1.67 up from $1.63 a year earlier. Analysts expected earnings per share of $1.66. Revenue grew from $16.9 billion in the quarter to $18.8 billion, which also compared favorably to Street expectations. International revenue grew 13%, driven by premium delivery products in the fourth period. Once again, the largest provider of package delivery had shipping issues in the all-important Christmas season that increased operating costs. To mitigate future logistic problems, the company said it would invest $6.5 to $7 billion in 2018, part of that on buying 14 Boeing 747-8 cargo jets and four Boeing 767s for its fleet. It also plans 18 new or retrofitted facilities this year, including adding three U.S. ground hubs. Providing guidance for 2018, the company expects profits of between $7.03 to $7.37 per share, which wraps around consensus estimates of $7.16, put expectations for a better future disappointed some investors.

       UPS shares are suitable for conservative, long-term investors, in my view. And the annual $3.32 dividend, yielding 2.6%, sweetens the pot.

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