Why UPS Stock Is Up By 7% Today
UPS Stock Rallies After Strong Quarterly Report
Shares of UPS gained strong upside momentum after the company released its third-quarter results. UPS reported consolidated revenue of $23.2 billion and adjusted earnings of $2.71 per share, beating analyst estimates on both earnings and revenue.
UPS increased its consolidated adjusted operating margin target to approximately 13% in 2021. Adjusted return on invested capital is expected to be around 29% this year.
The market reacted positively to the report as UPS showed strong revenue growth, beat analyst estimates and raised its full-year guidance. As a result, the stock opened with a gap up and made an attempt to settle above the $220 level.
What’s Next For UPS Stock?
UPS stock was under pressure after the second-quarter earnings report as investors focused on supply chain disruptions, rising costs and other challenges, but the third-quarter report indicated that the company’s business remains strong in today’s market environment.
Currently, analysts expect that UPS will report earnings of $11.21 per share in 2021 and $11.7 per share in 2022, so the stock is trading at 19 forward P/E which looks rather cheap for today’s market. Analyst estimates remained stable in recent months, but it looks that they will be adjusted in the upcoming days after the strong earnings report.
UPS stock may attract additional interest ahead of the holiday season, although some value-oriented investors may prefer to bet on UPS peer FedEx, which suffered a significant pullback in recent months and is trading at 11 forward P/E.
It should be noted that RSI for UPS stock has reached the extremely overbought territory, and it is already close to yearly highs that were tested back in May. Technically, the risks of a pullback are increasing as the stock managed to get from the $177 level to the $220 level without any pullback. However, the fundamental story looks strong, so UPS shares have a good chance to settle above the $220 level and move higher in the upcoming weeks.
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