UPS Stock Is Soaring and There's More Room to Run - Motley Fool
By now, most investors will know that UPS reported a bumper set of fourth-quarter earnings, and the stock soared higher in response. In a nutshell, the company is on track to meet its 2023 targets a year early. However, the party isn't over by a long shot. The trend in its numbers and operational trends suggest there could be plenty more upside to the stock to come. Here's why.
UPS is ahead of its targets
It's a good idea to start by recapping the 2023 targets laid out on the investor day in June 2020.
First, not only is UPS set to hit its 2023 targets a year early, it's driving toward the high end of them and above. The 2022 revenue and overall adjusted operating margin guidance are at the high end of the 2023 targets. Meanwhile, the all-important U.S. domestic operating margin guidance for 2022 is above the midrange of the 2023 target.
Finally, the 2021-2023 free cash flow (FCF) target of $24 billion to $27 billion looks well within reach, given the $10.9 billion generated in 2021 and the $9 billion guidance for 2022. If UPS hits FCF guidance in 2022, it will need just $7.1 billion in 2023 to hit the high end of its 2021-2023 target. That looks achievable.
By now, most investors will know that UPS reported a bumper set of fourth-quarter earnings, and the stock soared higher in response. In a nutshell, the company is on track to meet its 2023 targets a year early. However, the party isn't over by a long shot. The trend in its numbers and operational trends suggest there could be plenty more upside to the stock to come. Here's why.
UPS is ahead of its targets
It's a good idea to start by recapping the 2023 targets laid out on the investor day in June 2020.
First, not only is UPS set to hit its 2023 targets a year early, it's driving toward the high end of them and above. The 2022 revenue and overall adjusted operating margin guidance are at the high end of the 2023 targets. Meanwhile, the all-important U.S. domestic operating margin guidance for 2022 is above the midrange of the 2023 target.
Finally, the 2021-2023 free cash flow (FCF) target of $24 billion to $27 billion looks well within reach, given the $10.9 billion generated in 2021 and the $9 billion guidance for 2022. If UPS hits FCF guidance in 2022, it will need just $7.1 billion in 2023 to hit the high end of its 2021-2023 target. That looks achievable.
