Tomahawk, WI 08/15/2014 (Basicsmedia) – United Parcel Service, Inc. (NYSE:UPS) received a backlash from Wall Street after posting its earnings for the last quarter especially after the company cut its estimate for the full year. CNBC’s, Jim Cramer, believes that the market overreacted against the unexpected move by the global shipping titan, consequently maintaining that the company is only trying to divert more money into growing business. UPS is currently trading at the $96.07 mark 10 points adrift of its high.
The market according to Cramer has also reacted negatively towards United Parcel Service, Inc. (NYSE:UPS) as a result of the ongoing standoff in Ukraine, which many investors believe could result in an economic slowdown. Most of the investors sold their stock at the end of July when the company posted its earnings consequently reducing its estimates.
The move to slice full year estimates was attributed to the fact that the company expects increased demand that should considerably cause an increase in costs. United Parcel Service, Inc. (NYSE:UPS) expects its demand over the coming months to be higher than earlier thought.
“In part, the company cut its earnings forecast because it plans to spend more money in growing its business, and there is nothing wrong with that. And in part, is because the company is forecasting higher costs associated with stronger than expected demand,” said Mr. Cramer.
Concerns had earlier been raised’ by a number of investors who opted to sell their stakes in the company due to increased investment especially on customer service. Cramer maintains that UPS management team is confident about the company’s current positive trend that looks highly sustainable thus the reason behind the huge investment in customer service, as well as the enhancement of profit avenues.
“[…] The fact that management felt it was prudent to make this investments to improve customer service and enhance profitability down the road tells me that management is confident on their business.[…] they believe that recent positive trends will be sustainable,” said Mr. Cramer.
United Parcel Service, Inc. (NYSE:UPS) business going forward remains strong having posted an increase of 5% on domestic revenue package with total volumes for the yea currently up by 7%. UPS management team has already pointed out that business to consumer shipments is the strongest in a matter of four years and mostly in the retail segment.