United Parcel (NYSE: UPS) announced Q1 2020 results that missed analyst earnings estimates, additionally the company pulled full year guidance for the fiscal year.  UPS stock is down -4.8% vs. a flat market.

In our pre-earnings analysis on Grizzle LIVE, we viewed the divided yield as the attraction to the story. We’re still sitting on the sidelines, but the stock gets interesting in a recovery scenario with increased higher margin commercial volume.

 

Revenue came in at $18.03 billion, above consensus estimate of $17.2 billion – which had been revised sharply lower by analysts since the onset of the coronavirus pandemic.

UPS Q1 2020 Analyst Revenue Revisions

source: https://ycharts.com/

Adjusted earnings per share of $1.15 was 7% below consensus of $1.23, which were slashed -20% since the beginning of the year.  Management stated that the coronavirus had a negative -$140M on net income for the quarter.


Business to Consumer (B2C) volume in the U.S. had spiked to nearly 70% of total volume, offsetting commercial volume declines.  Average daily volume across all products was up 8.5% in the U.S.

However operating profit in the U.S. segment was came in at $401M down -42% on a year-over-year basis.  The increased volume in the segment couldn’t offset the combination of weaker profitability from the B2C segment and increased self-insurance accruals.

Outlook

Due to the coronavirus pandemic UPS has fully withdrawn it’s previous 2020 revenue and diluted earnings guidance.  They have targeted capex reduction of $1 billion for the year and have suspended buybacks.

UPS see’s Asia beginning to stabilize while Europe remains challenged.

Source: UPS Q1 Presentation

 

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