United Parcel Service, Inc. (NYSE:UPS) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was not a great result overall. While revenues of US$22b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 16% to hit US$1.65 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for United Parcel Service
Taking into account the latest results, the consensus forecast from United Parcel Service’s 27 analysts is for revenues of US$92.2b in 2024. This reflects a reasonable 3.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 18% to US$7.22. Before this earnings report, the analysts had been forecasting revenues of US$92.2b and earnings per share (EPS) of US$7.23 in 2024. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$146, suggesting that the company has met expectations in its recent result. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values United Parcel Service at US$190 per share, while the most bearish prices it at US$100.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 6.0% growth on an annualised basis. That is in line with its 5.3% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 5.2% annually. So although United Parcel Service is expected to maintain its revenue growth rate, it’s only growing at about the rate of the wider industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$146, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on United Parcel Service. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple United Parcel Service analysts – going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we’ve discovered 3 warning signs for United Parcel Service (1 makes us a bit uncomfortable!) that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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