Here’s Why Transportation Stocks are Falling Now
United Parcel Service, Inc. (NYSE:UPS) reported 25.8% year-over-year rise in net income for its most recent quarter today, accompanied by an 8.1% rise in revenue, which has now risen for the last four quarters, with income rising for the last three quarters and continually beating expectations. However, UPS shares are in the gutter today after the package and freight delivery service reported a disappointing third-quarter outlook.
In his earnings call today, UPS CEO D. Davis reminded investors that, though UPS had done well during its second quarter, much of the industry did not: “Back in February, in the middle of the quarter, 51 leading economies expected first quarter U.S. GDP to grow 3.6%. And as you know, it ended up at only 1.9%.” Davis went on to say that, while current forecasts call for second half GDP growth of more than 3%, the uncertain economic climate means actual growth could be anywhere between 1.5% and 3.5%. That entire range of possibilities falls below expected growth in the first half, which ultimately fell well short of predictions.
With the poor outlook, UPS shares have dropped 3.32% today. Here are other transportation stocks trading down on the news: FedEx Corporation (NYSE:FDX), Union Pacific Corp. (NYSE:UNP), CSX Corp. (NYSE:CSX), Canadian National Railway (NYSE:CNI), Kansas City Southern (NYSE:KSU), and Norfolk Southern Corp. (NYSE:NSC).