UPS stock price dives as Q4 results point to more shipping woes

UPS (NYSE: UPS) stock price plunged by more than 5% in the pre-market after the company published a weak guidance. The shares crashed to a low of $150, the lowest level since November 28 last year. They have pulled back by almost 9% from their highest point this year and by 21% from their highest point in 2023.

UPS, one of the biggest shipping companies in the world, announced a mixed financial report. In a statement, the company said that its revenue dropped by 7.8% to $24.9 billion. Its operating profit also crashed by over 22.5% to $2.5 billion. Some of this performance was because of a $512 million non-cash charge. In a statement, the company’s CEO said:

UPS results confirmed what FedEx said in December when it published weak financial results. Its earnings came in at $900 million as its sales crashed by 2.5% to $22.2 billion during the quarter. Like FedEx, UPS noted that daily volume growth dropped by 7.4%. Its operating margin also narrowed to 8.5%.

UPS is going through a difficult period as volume growth in the US waned because of the relatively high inflation. The company also suffered after a strike forced it to increase its wages in a deal valued at over $30 billion. Part-time workers will earn $21 while full-time ones will make $49 an hour.

Further, the company also experienced higher energy costs as the price of fuel remained at an elevated level. Most importantly, competition has remained high in the delivery industry. For example, Amazon has moved from obscurity to become the biggest player in the industry.

Analysts have been moderately muted about UPS recently. The most recent ratings came from Raymond James and Stifel who maintained their buy ratings. It was downgraded by Daiwa from outperform to neutral.