United Parcel Service Inc. (NYSE: UPS) reported second-quarter 2014 results before markets opened Tuesday. The package delivery service reported adjusted diluted earnings per share (EPS) of $1.21 on revenues of $14.27 billion. In the same period a year ago, FedEx reported adjusted EPS of $1.13 on revenue of $13.51 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.25 and $14.1 billion in revenue.

The company lowered its full-year EPS forecast to a new range of $4.90 to $5.00. UPS said that it plans to increase its operating expenses for capacity and peak-related projects by $175 million. Recall that the company took a public relations hit in the last holiday season as a result of its inability to deliver packages as promised. The consensus estimate had called for EPS of $5.09.

The company’s CFO said:

We are encouraged by the strong demand for UPS solutions around the world. As a result of this accelerated growth and our preparation for peak season, we are making investments in new capabilities and network capacity to ensure we meet customer expectations.

Revenue in the company’s domestic package segment rose 5.2% to $8.7 billion and international package revenues rose 6.2% to $3.3 billion. The supply chain and freight segment posted a revenue gain of 6.5% to $2.3 billion.

None of that mattered to investors, though, who saw only that earnings per share would be reduced and took the shares down sharply Tuesday morning.

Shares were down about 3.1% in premarket trading, at $99.51 in a 52-week range of $85.18 to $105.37. The Thomson/Reuters consensus price target on the shares was around $110.70 before the report.

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