UPS tops estimates as efficiency drive gains momentum

Investing.com -- United Parcel Service Inc. (NYSE: UPS) shares opened around 1% higher on Tuesday after the company reported its latest quarterly results.

UPS posted third-quarter adjusted earnings per share of $1.69, beating the analyst consensus of $1.63, as the delivery giant's network efficiency initiatives showed continued progress.

Revenue for the quarter rose 6.7% YoY to $22.9 billion, surpassing the analyst estimate of $22.28 billion. The company reported adjusted operating profit of $2.1 billion with a 9.0% adjusted operating margin.

All three business segments posted revenue growth, with Supply Chain Solutions leading at 18.2% YoY, followed by International at 7.1% and U.S. Domestic at 4.5%. CEO Carol Tomé said the results "demonstrate the continued strengthening of our business fundamentals, driven by premium growth and greater network efficiency."

Despite the beat, shares have lost some earlier gains after the company's CEO said on the earnings call that Q4 U.S. average daily volume is expected to be lower year-over-year.

The company now expects fiscal 2026 adjusted EPS of approximately $7.28, above the consensus of $7.20, and revenue of approximately $92.6 billion versus the estimate of $91.74 billion. For the fourth quarter, UPS projects revenue of approximately $25.7 billion, compared to the consensus of $25.53 billion, and adjusted operating profit of approximately $3.3 billion.

The U.S. Domestic segment generated operating profit of $1.03 billion on an adjusted basis with a 7.0% adjusted margin, while International achieved a 14.9% operating margin. Supply Chain Solutions posted adjusted operating profit of $274 million, though this represented a decline from $536 million in the prior-year period.

Reacting to the report, Citi analysts stated: "Results appear to reflect continued operational progress, with the step-up in its full-year FCF target to $6.1bn (from $5.5bn) encouraging evidence of stabilization."