UPS’s first-quarter profit beat the figure for the fourth quarter even though shipping volume at the end of the year surges due to holiday buying.
Andrej Ivanov / AFP via Getty Images
Shipping companies were a big lockdown winners in 2020. Now investors are learning that they are reopening plays as well.
United Parcel Service (ticker: UPS ) blew past expectations for its earnings on Tuesday morning. Profits came in at $2.77 a share from $22.7 billion in sales. Wall Street was only looking for $1.72 in per share earnings from $20.6 billion in sales.
Sales in all segments were way higher than in the first quarter of 2020. Prices rose more than 10% and total operating profits increased 164% year over year.
The stock is taking off, with a gain of about 8% in premarket trading. Futures on the S&P 500 and Dow Jones Industrial Average were both down about 0.1%.
Shippers typically have their best quarter at the end of the year, during the holiday shopping rush. UPS earned $1.67 a share back in the fourth quarter of 2018—a year before the pandemic affected any quarter in the comparison. In the first quarter of 2018, UPS earned $1.55 a share.
Nevertheless, UPS earned $2.77 a share in the first quarter of 2021, exceeding the $2.66 earned in the fourth quarter of 2020. UPS just put up a great quarter.
“I want to thank all UPSers for delivering what matters, including COVID-19 vaccines,” said CEO Carol Tomé in the company’s news release. “We continued to execute our strategy under the better not bigger framework, which enabled us to win the best opportunities in the market and drove record financial results.”
This is the most UPS has ever earned in a quarter. It is also the fourth consecutive big quarterly beat for the company. When the string of surprisingly strong results started this past July, the stock was at about $120 a share. It was at about $190 in premarket trading.
UPS shares gained 44% in 2020, but coming into Tuesday, the stock was only up about 4% year to date, trailing behind the 11% gain of the S&P 500. Stock in UPS peer FedEx (FDX) was in the same situation. Its shares are up about 6% year to date after rising 72% in 2020.
FedEx, just like UPS, has strung together a series of strong quarterly earnings performances. Shipping thrived in 2020. Things are looking just as good in 2021.
UPS scheduled a conference call for 8:30 a.m. Eastern time to discuss the results. Analysts and investors will be eager to hear about how the continuing economic recovery will affect results.
Write to Al Root at [email protected]
