United Parcel Service Inc. (NYSE:UPS) stock rose Tuesday after reporting third-quarter 2026 results that beat Wall Street expectations on adjusted earnings and revenue and raised its full-year outlook.
Earnings And Revenue Beat Estimates
Adjusted diluted EPS was $1.69, above the $1.63 estimate. Revenue rose 6.7% year over year to $22.9 billion, beating the $22.286 billion estimate. GAAP diluted EPS was $1.37.
Consolidated operating profit was $1.74 billion, with a 7.6% margin. Adjusted operating profit was $2.05 billion, with a 9% adjusted margin.
GAAP results included a $279 million net charge, or 32 cents per diluted share, reflecting $130 million in after-tax transformation costs and a $182 million Supply Chain Solutions goodwill impairment, partly offset by a $33 million gain from MD-11 asset sales.
Adjusted operating profit fell from $2.132 billion to $2.054 billion, and the adjusted operating margin contracted from 10.0% to 9.0%. Adjusted EPS fell from $1.74 to $1.69.
U.S. Domestic And International Revenue Rise
U.S. Domestic revenue increased 4.5% to $14.87 billion, driven by a 6.1% rise in revenue per piece.
Adjusted operating margin was 7%. Average daily package volume fell to 15.62 million from 16.15 million, while adjusted cost per piece increased 5.5% to $13.32.
International revenue rose 7.1% to $5.01 billion, driven by a 15% increase in revenue per piece. Operating margin was 14.9% on both a GAAP and adjusted basis.
Supply Chain Solutions revenue rose 18.2% to $2.98 billion, driven by growth in forwarding and logistics, including healthcare. Adjusted operating margin was 9.2%.
Efficiency Initiatives Deliver $1.8 Billion in Benefits
UPS said its Network Reconfiguration and Efficiency Reimagined initiatives generated about $1.8 billion of benefits through the first nine months of 2026 and are expected to deliver nearly $3 billion for the full year.
Efficiency Reimagined is expected to continue through the fourth quarter of 2027.
Operating cash flow for the first nine months was $5.99 billion, while adjusted free cash flow reached $4.22 billion.
"As momentum builds, we are entering the holiday shipping season from a position of strength, with the most automated and efficient network in our history. Given the strength we see in the business, we are raising our full-year financial guidance," said Carol Tomé, UPS chief executive officer.
UPS Raises Full-Year Outlook
UPS raised full-year adjusted EPS guidance to about $7.28 from $7.22, above the $7.19 estimate.
Revenue guidance increased to about $92.6 billion from $91.2 billion, versus the $91.725 billion estimate.
UPS projects adjusted operating profit of about $8.75 billion and adjusted free cash flow of about $6.1 billion.
For the fourth quarter, UPS expects revenue of about $25.7 billion, above the $25.509 billion estimate, and adjusted operating profit of about $3.3 billion.
Full-year plans also call for about $3 billion in capital expenditures, roughly $5.4 billion in dividend payments, subject to board approval, and $1.3 billion in pension contributions.
Earnings Conference Call Comments
UPS said it expects to achieve nearly $3 billion in benefits from its initiatives by fiscal year 2026. The company's Efficiency Reimagined initiative is not expected to conclude until the fourth quarter of 2027.
UPS CEO noted that momentum in trade lanes between China and the U.S. continued in the third quarter.
The company's international business achieved year-over-year operating profit growth for the first time since changes to U.S. trade policy in 2025.
Healthcare revenue exceeded $3 billion for the third consecutive quarter, with year-over-year growth recorded in every segment. U.S. consumers are showing resilience, and the outlook for demand during the holiday season is strong.
However, the company expects fourth-quarter average daily volume in the U.S. to be lower compared to last year, reflecting earlier delivery actions taken to reduce Amazon volume.
UPS's CEO estimates that the logistics opportunities linked to data centers are valued at $15 billion.
UPS Price Action: United Parcel Service shares were trading higher by 1.25% at $101.56 at the time of publication on Tuesday, according to Benzinga Pro data.