What Happened?

A number of stocks fell in the afternoon session after bellwether United Parcel Service (UPS) reported weak earnings and withheld its full-year guidance, citing “macro-economic uncertainty” and low consumer sentiment. 

The logistics giant reported a decline in revenue and missed profit estimates, sending a chill through the entire logistics chain. UPS pointed to a challenging economic environment and near-historic lows in U.S. consumer confidence as key factors for its performance. By withholding its full-year forecast, the company signaled significant uncertainty ahead, confirming fears of a broader economic slowdown that could impact demand for shipping and freight services. This news weighed on other ground and rail transportation stocks, as investors worried that the headwinds affecting UPS could be a sign of wider issues across the industry.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Ground Transportation company RXO (NYSE: RXO) fell 3.1%. Is now the time to buy RXO? Access our full analysis report here, it’s free.
• Ground Transportation company Universal Logistics (NASDAQ: ULH) fell 11%. Is now the time to buy Universal Logistics? Access our full analysis report here, it’s free.
• Ground Transportation company Werner (NASDAQ: WERN) fell 3.7%. Is now the time to buy Werner? Access our full analysis report here, it’s free.
• Automobile Manufacturing company Rivian (NASDAQ: RIVN) fell 4.5%. Is now the time to buy Rivian? Access our full analysis report here, it’s free.
• Specialty Equipment Distributors company Custom Truck One Source (NYSE: CTOS) fell 3.3%. Is now the time to buy Custom Truck One Source? Access our full analysis report here, it’s free.

Zooming In On Universal Logistics (ULH)

Universal Logistics’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for Universal Logistics and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 4 days ago when the stock gained 9.1% on the news that the company reported second-quarter financial results that, while missing analyst estimates, were in line with its prior guidance. 

The logistics provider posted total operating revenues of $393.8 million, a 15% decrease from the prior year, and adjusted earnings per share of $0.32, a 73% drop. Both metrics fell short of analyst forecasts. However, Universal's CEO commented that the results "were broadly in-line with our previously guided expectations." The stock had declined 39% over the past six months, suggesting that investors may have already priced in the weak performance. The announcement of a quarterly cash dividend of $0.105 per share may have also provided some support for the shares.

Universal Logistics is down 46.1% since the beginning of the year, and at $23.59 per share, it is trading 54.9% below its 52-week high of $52.28 from November 2024. Investors who bought $1,000 worth of Universal Logistics’s shares 5 years ago would now be looking at an investment worth $1,303.

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