2023-05-02 05:57:00 ET
Nobody said this would be an easy year for Berkshire Hathaway holding United Parcel Service (NYSE: UPS) . After all, when the economy slows, so does the transportation sector, particularly the demand for package deliveries. These cyclical headwinds came to the forefront in UPS's recent first-quarter earnings, and investors sold the stock aggressively in its aftermath. However, is it time to take advantage of the dip or avoid the store altogether? Here's the lowdown.
In a nutshell, end demand isn't as strong as management thought. For example, in the international markets, export activity in Asia "gradually recovered through the quarter, but at a slower pace than we anticipated," according to CFO Brian Newman on the earnings call.
Meanwhile, conditions in the U.S. seemed to worsen throughout the quarter. For instance, CEO Carol Tome noted, "Relative to our base plan, volume was higher than we expected in January, close to our plan in February, and then moved significantly lower than our plan in March."
For further details see:
Is It Time to Buy the Dip on This Warren Buffett Dividend Stock?