united parcel service (UPS – (Free Report) recently appeared on the list of most searched stocks on Zacks.com. Therefore, you may need to consider some important factors that may influence the stock's performance in the near future.
The package delivery service's stock has returned +8.3% over the past month. In contrast, the Zacks S&P 500 Composite Index, +3.6% was unchanged. The Zacks Transportation – Air Cargo & Freight industry, which includes UPS, has gained 4.9% in this period. The key question here is where the stock is likely to go in the short term.
While media reports and rumors about significant changes in a company's business outlook typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
At Zacks, we prioritize evaluating changes in company earnings estimates rather than focusing on anything else. This is because we believe that the fair value of a stock is determined by the present value of its future income stream.
Essentially, we study how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so will the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
UPS is expected to post earnings of $1.57 per share for the current quarter, representing a year-over-year change of -28.6%. Over the past 30 days, the Zacks Consensus Estimate has changed by -1%.
The consensus earnings estimate for the current fiscal year of $8.30 represents a -5.5% change from the prior year. This estimate has changed by -0.1% over the past 30 days.
Next year's consensus earnings estimate of $9.74 represents a +17.4% change from what UPS was expected to report a year ago. Over the past month, the forecast has changed by +0.5%.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, harnesses the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent change in consensus estimates, along with three other factors related to earnings expectations, has led to a Zacks Rank of #3 (Hold) for UPS.
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
There's no question that a company's profit growth is the best indicator of its financial health, but nothing will happen if it doesn't make a profit. It's nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it's important to know a company's earnings growth potential.
For UPS, the consensus revenue estimate for the current quarter is $21.98 Billion, representing a year-over-year change of -4.1%. Forecasts of $93.29 billion and $96.99 billion for the current and next fiscal year represent changes of +2.6% and +4%, respectively.
Last reported results and surprising details
UPS reported revenue of $24.92 billion in its last reported quarter. This represents a -7.8% year-over-year change. EPS for the same period was $2.47, compared to $3.62 a year ago.
The reported revenue represents a surprise of -1.54% when compared to the Zacks Consensus Estimate of $25.31 billion. EPS surprise was +1.23%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company has failed to beat consensus revenue estimates in any of the last four quarters.
evaluation
You cannot make efficient investment decisions without considering stock valuation. To predict a stock's future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects.
Compare the current value of a company's valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to its own value, while also Value helps determine whether a stock is fairly valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional valuation metrics and rates stocks from A to F, where A is better than B. , B is better than C, A is better than B, and B is better than C). ), can be very helpful in identifying whether a stock is overvalued, properly valued, or temporarily undervalued.
UPS is rated C on this score, indicating that it performs on par with its peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and many others on Zacks.com, may help you decide whether the market buzz surrounding UPS is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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