UPS and Coca-Cola Raise Guidance by Charging More, Not Selling More

Dear readers,

The sturdiest earnings news of the day comes from a package carrier and a soda maker, not from the AI complex. UPS and Coca-Cola both raised their full-year guidance on Tuesday, and both did it with weak or flat volumes. Pricing, mix and cost discipline did the work. Wall Street is trading slightly higher, led by chip stocks. The Fed opens a two-day meeting, and a rate hold is widely expected.

Yesterday’s question was who will finance the next round of AI spending. Anthropic’s prospectus now supplies some of the numbers, and we get to those below.

UPS: Fewer Packages, More Money per Parcel

UPS keeps shrinking in order to earn more. Third-quarter revenue rose 6.7 percent to $22.9 billion even though average daily package volume fell 4.2 percent. Pricing filled the gap, with revenue per piece up 7.7 percent. Adjusted earnings came to $1.69 per share, against a consensus of $1.63.

On a reported (GAAP) basis, earnings fell to $1.37 per share from $1.55 a year earlier. Restructuring costs and a $182 million goodwill impairment in the supply chain solutions business weigh on that figure.

UPS raised its 2026 outlook to roughly $92.6 billion in revenue, up from $91.2 billion. Adjusted earnings per share should come in around $7.28, up from $7.22. The company says its savings target of nearly $3 billion is on track.

It also says the glide-down of low-margin Amazon volume has been complete since the second quarter. The adjusted margin in the US package business rose from 6.4 percent to 7.0 percent.

There are weaker spots. The group’s adjusted operating margin slipped to 9.0 percent from 10.0 percent a year ago. UPS is offsetting high fuel costs tied to the Iran conflict with surcharges, and Citi points to slightly lower implied margins. The stock is trading just above $103 in the session, against about $100 at Monday’s close.

The fourth quarter is the real test. UPS is targeting roughly $25.7 billion in revenue and plans around 100,000 seasonal hires. Peak season will show whether its pricing holds when volumes are soft.

Coca-Cola: Beat on Everything, but the Praise Was Priced In

Coca-Cola beat expectations for the fourth quarter in a row. Revenue rose 7.4 percent to $13.38 billion, against analyst estimates of $12.92 billion. Adjusted earnings were $0.91 per share, versus a consensus of $0.88. Organic revenue growth of 7 percent was nearly double the 4.1 percent analysts expected. India, China, Mexico and Brazil drove the gains, along with sugar-free drinks: Coca-Cola Zero Sugar grew volume by 16 percent.

Management raised its 2026 outlook. Adjusted earnings per share are now seen growing at least 11 percent, up from 9 to 10 percent before. The catch is North America, where volumes were flat and higher prices carried revenue. Finance chief Murphy warned that pressure on consumers will persist into 2027, and that aluminum, PET plastic and diesel are getting more expensive.

The stock, at just over $92, is little changed on the day. It sits a little more than 3 percent below its October 22 high and is up 33 percent year to date.

Should investors sell immediately? Or is it worth buying UPS?

A further tailwind is coming from KFC, which will switch more than 3,700 US restaurants from PepsiCo to Coca-Cola starting in January 2027. Jefferies puts the revenue potential at $375 million to $560 million. Piper Sandler recently raised its price target from $95 to $102.

The quality is evident, but much of it is already in the price. Buyers at these levels are paying for reliability, not a surprise.

Consumer: Travel Holds Up, Appliances Don’t

The quarterly reports paint a split picture of the American shopper. Royal Caribbean gained about 7.5 percent after reporting higher summer profit and raising its outlook. JetBlue jumped about 11 percent even though its summer loss was larger. Whirlpool fell sharply after a quarterly loss. Consumers are still paying for experiences and hesitating on durable household goods.

The macro data back the picture of a resilient consumer. Consumer confidence jumped to 91.7 in October, against expectations of 81.0. Durable goods orders rose 1.8 percent in September, ahead of the expected 1.4 percent, mostly on transportation.

Pricing power matters here too. General Motors is up about 4 percent after announcing it will move its listing from the NYSE to the Nasdaq on November 17. S&P Global gained about 5 percent after quarterly results above expectations.

Anthropic: The Prospectus Brings Numbers, and the Banks Collect

Anthropic’s IPO prospectus is giving the AI sector a lift. The company reports first-half revenue of $16.3 billion. Its net loss of $80.7 billion stems mostly from the revaluation of convertible notes, which accounts for $72.4 billion. Adjusted, Anthropic shows an operating profit of $1.6 billion.

The balance sheet cuts the other way. Compute commitments run to roughly $417 billion, against more than $112 billion in cash. The Nasdaq listing under the ticker ANT is targeted for November.

Broadcom is the concrete beneficiary. Bank of America, Citi, Morgan Stanley and Blackstone are financing Anthropic’s hardware purchases with $63 billion. Broadcom trades at just over $338, well below its yearly high of $495. Morgan Stanley, which is helping lead the IPO, is also in positive territory. The thesis is that the business of financing AI generates fees whether or not the models live up to every expectation.

The Takeaway

UPS and Coca-Cola show what this earnings season rewards: pricing power and cost control count for more than volume growth. That is also the yardstick for the reports still to come.

The next test arrives on Wednesday. The Fed decision takes center stage, and a hold is considered a given. Alphabet and Microsoft also report, and Microsoft is offering voluntary buyouts to roughly 60,000 employees. For investors, the order of the day is to favor companies that can raise prices and cut costs without growing volume.

Best regards,
The StocksToday.com Editorial