It appears that our sputtering economy is slowing things down at the world's largest delivery company, a circumstance that may not bode well for companies in a variety of industries.
United Parcel Services
According to a statement from UPS headquarters in Atlanta, the company expects to report earnings of $0.86 or $0.87 per share. Previous quarterly guidance was in the range of $0.94 to $0.98 a share. Guidance for the full year was unchanged from the $4.30- to $4.50-per-share target issued earlier, although you've gotta believe that a pullback there is becoming inevitable.
In lowering its guidance, UPS said, "The U.S. economy has continued to weaken, causing a reduction in domestic package volume and a shift away from premium products. Significantly increased fuel costs in the quarter also contributed to the lower-than-expected results."
By the very nature of their businesses, UPS and primary rival FedEx
I suppose I've grown somewhat weary of economic talking heads trotting out the "technical definition" of a recession (two consecutive quarters of negative growth) and harrumphing that thereby we can't really tell we've been in a recession until it's over. Other than "negative growth" being a decided oxymoron, excessive dependence on that definition avoids facing an apparent truth: We're knee-deep in a potentially severe and lengthy recession. UPS has simply confirmed the obvious from its important vantage point.
In the weeks ahead, we'll almost certainly receive reports from a variety of big companies indicating sloppy U.S. results, offset to one degree or another by strength overseas. I'm talking here about the likes of Mexican cement producer Cemex
For my money, the message here is that investing today requires more care and patience than has been the case for a long, long time. UPS, for instance, is a solid company, a leader in its field. But those who take on or already own its shares shouldn't be looking for an overnight pop.
For related Foolishness:
UPS and Dow Chemical are Income Investor recommendations, and FedEx is a Stock Advisor pick. Cemex is a pick of both the Stock Advisor and Global Gains teams. Treat yourself to a free 30-day trial subscription to any of these services.