Package-delivery giant UPS reported strong fourth-quarter earnings early Tuesday, offering strong 2022 guidance and hiking its quarterly dividend. UPS stock spiked higher, breaking out past a buy point.
The company reports after some transportation companies struggled to attract staff during the pandemic, and after the world's backed-up supply chains raised concerns about holiday-season deliveries and higher costs.
UPS Earnings
Estimates: Wall Street expected UPS earnings to rise 17% to $3.10 per share, with revenue up 9% to $27.06 billion.
Results: UPS earnings rose 35% to $3.59 a share. Revenue climbed 11.5% to $27.77 billion.
Outlook: UPS sees 2022 revenue of about $102 billion vs. views for just shy of $100 billion.
Meanwhile, UPS also hiked its quarterly dividend by 49% to $1.52 a share.
UPS Stock
UPS stock shot up 14% to 230.69 in the stock market today. Shares blasted out of a flat base with a 220.34 buy point. UPS stock also gapped above its 200-day and 50-day lines.
UPS stock has an 87 Composite Rating. Its EPS Rating is 87.
Rival FedEx climbed 2.5%, but is well off 52-week highs.
Supply Chain Issues
UPS reports as the world's shipping network remains clogged — a product of Covid restrictions and difficulties attracting labor that can be low-paying and tiring. With available containers not always where they needed to be, and workers demanding better compensation, the price to secure shipping space and get product shipped rose.
Businesses that pulled back in 2020 in anticipation of a downturn were caught off-guard by a wave of demand for goods, much of which came via online purchases. Concerns about the supply chain's ability to keep up with that demand stretched into the 2021 holiday season. Analysts expect the cost of ocean freight to remain elevated this year.
One analyst who follows UPS stock, however, said she believes UPS' delivery times may have held up last month.
"For the most part, the weather was OK during December, and consumers concerned about shortages and empty shelves started their holiday shopping earlier than normal," Cowen analyst Helane Becker said in a research note last week. "This likely helped on-time performance."
UPS in November announced a regular quarterly dividend of $1.02 per share. When it reported third-quarter results in October, UPS said it expected strong consumer demand throughout the fourth quarter, even as it dealt with higher costs and staff shortages. The company boosted its full-year adjusted operating margin target, and announced a general U.S. rate increase of 5.9% for 2022.
The company, in September, said it planned to hire more than 100,000 seasonal workers. Becker said that based on advertisements seen by the firm, Cowen believes wages for some of those jobs ran higher than $20 an hour. That was higher than pre-pandemic hourly wages of $13, she said.
