United Parcel Service (UPS -0.20%) delivered quarterly revenue and profit growth for the first time in about a year and a half, and investors are cheering the news. Shares of UPS opened up 10% on Thursday and traded up 6% as of 10 a.m. ET.
Moving in the right direction
It has been a difficult period for shipping companies. Large customers have cut back on orders due to economic uncertainty, creating a weak pricing environment. UPS has faced these sector headwinds while also dealing with a new labor deal that boosted costs.
The company earned $1.76 per share in the quarter on revenue of $22.2 billion, beating Wall Street's consensus estimate for earnings of $1.63 per share on sales of $22.1 billion. Revenue was up 5.8% year over year on strong average daily volume.
"After a challenging 18-month period, our company returned to revenue and profit growth," CEO Carol Tomé said in a statement. "Peak season is nearly upon us, and we are ready to deliver another successful holiday season and continue the progress we demonstrated in the third quarter."
Is UPS a buy?
The news wasn't all good. UPS cut its full-year 2024 revenue guidance to about $91.1 billion, below the previous $93 billion guidance and Wall Street's $92 billion expectation. On the post-earnings conference call, Tomé also said the macro environment was "slightly worse than expected," and that large customers have "tempered" holiday expectations.
UPS is focused on higher-margin specialty segments and trying to get costs as low as possible. But there is only so much any shipping company can do when demand for its services is low. UPS has a bright long-term future, but patience will be required for those who buy in now.
