- UPS Stock soared 1.7% after the announcement, but investors were not happy with the decision and the price fell by 1.94%.
- UPS agreed with Teamster, avoiding the strike slated to commence on August 1, 2023.
Investors disagree with the agreement between United Parcel Service and the International Brotherhood of Teamsters; UPS Stock is down by 1.94%. The newly reached arrangement is over a five-year labor contract, which would potentially prevent a strike of nearly 330,000 package-delivery drivers and package sorters.
United Parcel Service (UPS) Stock: Agreement Which Averted the Strike
The labor union stated that the proposed contract’s value is overall $30 Billion. However, the employees still need to ratify the agreement. When the news of the tentative deal broke out on July 25, 2023, UPS’s share price gained nearly 1.7%.
It should be known that the truce was reached just days before the impending strike is slated to begin on August 1, 2023.
The five-year agreement is set to raise the wages of UPS’ complete workforce and create more full-time jobs. It would also involve installing processes like workplace protection with improvements in the existing ones. There would also be a pay rise of $2.75 extra per hour for existing full-time and part-time UPS workers, plus a $7.50 extra per hour over the length of the contract.
Even though the United Parcel Service circumvented the strike, the extra burden the agreement could bring on the parcel service company could affect its financials. This could be why investors are unhappy with the company’s decision. Due to this issue, the company even had to push its earnings date to August 8, 2023.
United Parcel Service (NYSE: UPS): Technical Analysis
At press time, UPS Stock is trading at $184.69 with a drop of 1.94%; previous close and open were at $188.34 and $187.81, respectively. The 52-week range is from $154.87 to $209.39, indicating that the current price is closer to a lower point. With a volume of 9.95 Million shares, the market cap is $158.628 Billion.
The trailing twelve-month (TTM) price-to-earnings (P/E) ratio is 14.94 indicating an undervalued stock price. At the same time, the (TTM) earnings per share (EPS) is $12.36, showing strength. Analysts provided a 2.48 rating for HOLD and estimated a price target at $191.23 with a 3.5% upside.
UPS reported its last earnings on April 25, 2023, where the reported revenue of $22.925 Billion failed to beat the estimated value of $22.989 Billion by 0.28%. Compared to the previous quarter, revenue fell by 5.96%.
The reported earnings of $2.20 per share surpassed the expected value of $2.197 per share by 0.16%. Compared to Q1, EPS fell by 27.87%.
The subsequent earnings will be reported on August 8, 2023, where the revenue shall be around $23.067 Billion and the earnings will be $2.503. During the quarter, operating expenses soared to 13.70% to $2.81 Billion, and operation margin (TTM) jumped 12.94%.
The net income fell by 28.81% to $1.90 Billion, the net profit margin is down by 24.27% to 8.27, and the profit margin surged by 10.90%. The (TTM) revenue is $98.89 Billion, and the gross profit (TTM) is $25.09 Billion. UPS’s share price surged 1.02% in a week, 5.40% in three months, 3.39 in six months, and 5.98% YTD.
United Parcel Service (UPS) Stock: Candle Exploration
The previous earnings created a significant gap that the price action is yet to fill. The current rejection at the crucial resistance at $186.35 also needs confirmation.
If the price falls below this level in the coming trading sessions, the price action shall consolidate above S1 at $166.13, at least till the subsequent earnings.
If the rejection fails and the price increases, it could try to surpass R1 at $197.90. However, to cross R2 at $209.21, strong momentum is required. Considering the upcoming financial burden UPS might face due to the agreement, a steep price rise is unlikely.
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