United Parcel Service, Inc. UPS reported first-quarter 2018 earnings of $1.55, beating the Zacks Consensus Estimate of $1.54 per share. The bottom line also increased 17.4% on a year-over-year basis. Results were aided by strong performances from the International and Supply Chain and Freight segments.

Revenues improved 10% to $17,113 million from the year-ago quarter, outpacing the Zacks Consensus Estimate of $16,443.6 million. This upside was driven by strong demand for UPS solutions.

Segmental Details

U.S. Domestic Package revenues climbed 7.2% year over year to $10,227 million in the first quarter, owing to improved revenues across all products. However, segment operating profit (adjusted) declined 20.4% to $756 million due to rough weather conditions among other factors.

Segment average daily package volumes expanded 4.6%, backed by a 4.1%, 9.3% and 4.3% rise in Ground products, Next Day Air services and Deferred Air products, respectively. Average revenue per piece for the segment was up 2.6%.

International Package revenues improved 15% to $3,533 million. Daily export volumes rose 12% in the quarter under review on the back of premium products outpacing non-premium products. Segment operating profit increased 15% to $594 million as well.

Supply Chain and Freight revenues grew 16% to $3,353 million. Operating profits in the segment increased 14% to $170 million in the first quarter. Segment results were boosted by impressive revenue-quality initiatives, growth strategies as well as structural cost reductions.

United Parcel Service, Inc. Price, Consensus and EPS Surprise

United Parcel Service, Inc. Price, Consensus and EPS Surprise | United Parcel Service, Inc. Quote

Other Details

In the first quarter, the company’s capital expenditure was $1.5 billion. Also, UPS distributed approximately $840 million to shareholders.

2018 Outlook

The package delivery company expects adjusted earnings per share for the current year in the range of $7.03-$7.37, unchanged from its previous expectation. The Zacks Consensus Estimate for the metric stands at $7.22 per share. Free cash flow is anticipated between $4.5 billion and $5.0 billion.

Meanwhile, the effective tax rate is projected at 23-24% for the remainder of the year. Also, the company’s capex is likely to be in the band of $6.5-$7.0 billion.

Zacks Rank & Key Picks

UPS carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Cathay Pacific Airways Ltd. CPCAY, Gol Linhas Aereas Inteligentes S.A. GOL and SkyWest, Inc. SKYW, each with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Cathay Pacific Airways, Gol Linhas and SkyWest have gained more than 11%, 75% and 53%, respectively, in a year.