Summary
UPS beat both EPS and sales expectations in its second quarter.
The company was able to grow sales in all segments, while rising costs caused operating income to drop.
Even though the company is not doing anything wrong, I do not see enough evidence to buy this stock on the mid-term.
United Parcel Service (NYSE:UPS), one of America's leading companies in the air delivery & freight services industry, has become both a well-known company and stock over the past few decades. The problem is that the stock is still at 2016 levels after completely ignoring the broader stock market rally over the past few months. The reasons are slow bottom line growth, thanks to higher costs, and lower profitability and low investor expectations when it comes to the company's transformation plan. In this article, I won't become bearish, but rather, will tell you why I believe the stock should be ignored by traders.
Source: Huffpost
EPS Beat Again
Second-quarter adjusted EPS came in at $1.94 versus expectations of $1.92. This is 23% higher compared to the prior-year quarter and the 6th consecutive EPS beat. Also note that the company was able to grow EPS throughout 2015 and 2016, before lagging economic indicators started to improve in 2017. I am saying lagging indicators because leading indicators bottomed in Q1 2016. However, real economic growth started to pick up in 2017, which is essentially the main driver behind the company's quarterly performances.
