UPS Stock Is Tumbling. Poor Earnings Fan Freight-Business Fears.

The stock was down 12% at $127.73. The

S&P 500

was up about 0.2% and the

Dow Jones Industrial Average

was down about 0.1%.

The logistics company, which is seen as an economic bellwether, also updated its outlook for 2024, trimming its consolidated revenue guidance to $93 billion, down $250 million from the prior midpoint. Operating profit is expected to be about $8.7 billion; the midpoint of prior guidance was about $9.6 billion. Wall Street currently projects about $9.6 billion in 2024 operating profit.

The numbers were weak. Lower shipping volumes, weaker pricing, and higher labor costs are weighing on profits. Adjusted earnings fell year over year for the sixth consecutive quarter, according to FactSet. Sales have dropped for seven consecutive quarters.

Volume growth returned to the U.S. domestic market, rising 1% year over year. That’s a small positive, but the higher volumes aren’t bringing in more profits. “The market is going to walk away from 2Q maybe feeling better that volumes are not impaired,” wrote Bernstein analyst David Vernon. ”At the same [time wonder] whether the focus on revenue quality is shifting from value to volume. We are incrementally bearish on the rate of margin improvement.”

He rates shares Buy and has a $184 price target on UPS stock.

The shares dropped despite relatively low expectations. Coming into Tuesday, UPS stock had fallen almost 8% this year, trailing the S&P 500’s rise by some 24 percentage points.

Transportation investor “sentiment is most negative on parcel … especially UPS,” wrote Baird analyst Garrett Holland in a preview report.

He did expect UPS to be able to meet second-half estimates, though. That turned out not to be the case. Holland rates UPS stock at Buy with a $170 price target.

Options markets imply UPS shares will move about 5% up or down following earnings. Shares have moved an average of about 4% over the past four reports. They have risen once and fallen three times over that span.

Write to Al Root at [email protected] and George Glover at [email protected]