United Parcel Service, Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

United Parcel Service, Inc. (NYSE:UPS) shareholders are probably feeling a little disappointed, since its shares fell 9.4% to US$142 in the week after its latest yearly results. Revenues of US$91b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$7.80, missing estimates by 7.3%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for United Parcel Service

Taking into account the latest results, the consensus forecast from United Parcel Service's 25 analysts is for revenues of US$93.1b in 2024. This reflects a credible 2.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 3.6% to US$8.16. Before this earnings report, the analysts had been forecasting revenues of US$95.6b and earnings per share (EPS) of US$9.73 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

The analysts made no major changes to their price target of US$162, suggesting the downgrades are not expected to have a long-term impact on United Parcel Service's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic United Parcel Service analyst has a price target of US$215 per share, while the most pessimistic values it at US$95.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that United Parcel Service's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.3% growth on an annualised basis. This is compared to a historical growth rate of 7.2% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.1% annually. Factoring in the forecast slowdown in growth, it seems obvious that United Parcel Service is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for United Parcel Service. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$162, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple United Parcel Service analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that United Parcel Service is showing 3 warning signs in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.