United Parcel Service, Inc. (NYSE: UPS – $110.08) said third-quarter adjusted earnings per share came in at $1.82, up 26% from last year’s third period and equal to Street estimates. Revenue climbed 7.9% to $17.444 billion, but shy of the $17.49 billion consensus. U.S. domestic revenue grew 8% to $10.4 billion on growth in deliveries and service mix. Revenue from the company’s international operations grew 5%, with gains in all geographical regions, but encountered headwinds from rising fuel costs and currency translation. The Supply Chain and Freight unit grew revenue 12% to $3.5 billion.
The world’s largest package delivery provider expects 2018 adjusted earnings per share in a range of $7.03 to $7.37, bracketing analysts’ expectations of $7.25. As previously guided, UPS expects its all-important fourth quarter adjusted earnings per share to increase about 15% from last year to $1.91, despite anticipated currency headwinds in emerging markets and one less operating day during the peak delivery season. The company is raising free cash flow guidance to over $5.0 billion in 2018 and said its capital expenditure budget for 2018 remains as planned between $6.5 billion and $7.0 billion.
As has been the case of late during earnings season, traders were looking for more sending shares of UPS down about 3.7% in today’s trading. Dividends have grown about 8% annually over the past five years to its current rate of $3.64/share, yielding 3.2% at current levels. While the shares are fairly valued, long-term commitments can be maintained.