United Parcel Service, the world's largest package delivery company, reported a quarterly profit that beat estimates and forecast record-high profits in 2011, sending its shares up 4 percent.
In less than two years from the recession, they already think they can exceed peak earnings, said BB&T analyst Kevin Sterling.
The economic bellwether's fourth-quarter adjusted operating profit rose to $1.08 per share, up 44 percent from a year ago and topping the $1.05 per share expected by analysts, according to Thomson Reuters I/B/E/S.
The gain was 3 cents-per-share more when factoring in a gain from the sale of a logistics unit. Revenue rose to $13.42 billion from $12.38 billion.
UPS said revenue-per-piece shipped improved 3.5 percent in the quarter, mainly through higher base pricing and fuel surcharges. Average daily package volume rose 1.7 percent in the quarter as well.
On a conference call, UPS called the pricing environment rational and said rate increases imposed earlier this year have been reasonably well received.
Atlanta-based UPS, which calls for moderate global growth in 2011, said it controlled costs as compensation and benefit expenses rose less than volume.
UPS handles goods equivalent to 6 percent of the U.S. gross domestic product (GDP) and 2 percent of global GDP in its trucks and planes, the company said, so its shipment trends give a tangible picture of consumer demand.
The strongest consumer spending in more than four years and robust exports spurred economic expansion in the fourth quarter, government data showed on Friday.
This is a combination of strong volumes, which are clearly a good indication for the U.S. and even the global economy, but also tells me that UPS is really getting pricing, and all that pricing leverage is flowing through to the bottom line, Sterling said.
They forecast a range of $4.12 to $4.35 a share for this year, which would be up 16 percent to 22 percent from its 2010 adjusted results and would surpass its prior peak earnings set in 2007.
Analysts were expecting $4.18, on average, for the year, according to Thomson Reuters I/B/E/S.
(For a graphic: http://r.reuters.com/hyr77r)
UPS's shares rose 4 percent, or $2.85, to $74.46 in morning New York Stock Exchange trading, while shares of smaller rival FedEx Corp rose about 3 percent.
FedEx in December also raised its fiscal full-year outlook on record holiday shipments, business in Asia and growth from emerging markets.
UPS's shares have gained about 20 percent in the past year. That tops the rise of 14.4 percent for FedEx Corp, the second- largest package delivery company, but lags the 27 percent gain in the Dow Jones Transportation Average .
UPS said it plans to repurchase about $2 billion of its shares this year, up from $800 million last year.
(Reporting by Lynn Adler, editing by Maureen Bavdek)