United Parcel Service (UPS -10.57%) missed earnings expectations and provided no full-year guidance due to ongoing macro uncertainty. Investors are racing for the exits, sending UPS shares down 10% as of 11 a.m. ET.
Image source: UPS.
Trade wars take their toll
It has been a difficult few years for transportation companies. In 2024, fears about a slowing economy and higher interest rates caused large shippers to trim inventory levels, leading to less demand. The new year brought new uncertainty as tariffs and trade wars disrupted normal shipping patterns.
UPS sees no end in sight. The company earned $1.55 per share in the quarter, missing the $1.57-per-share consensus and declining from $1.79 per share a year ago. Revenue came in at $21.2 billion, down 3% year over year but slightly ahead of expectations.
CEO Carol Tome in a statement said the company continues to operate in "a dynamic and evolving trade environment."
The company provided no full-year revenue or operating profit guidance but did say it expects about $3.5 billion in capital expenditures and $1 billion in share repurchases. The share repurchases for the year have already been completed.
Is UPS a buy?
UPS is now off 26% year to date. The company is an essential cog in the global transportation network and should rebound eventually as trade flows eventually normalize.
The question is when that will happen. So far in 2025, betting on a recovery has been a losing proposition, and with UPS not even offering guidance, it appears management sees no end in sight. Investors buying in now get a 7% dividend yield, but they will likely need a lot of patience as the macro situation plays out.
