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United Parcel Service Inc Class B UPS

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Company Report

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Port Strike a Headache for Shippers but a Potential Tailwind for Certain US Transport Stocks

Matthew Young

As anticipated, the International Longshoremen’s Association has implemented a work stoppage across US East Coast and Gulf Coast ports. As we understand it, the dockworkers union initially wanted a more than 70% increase in wages over a six-year period in order to return to the negotiating table. Before the strike, it sounded to us as if the Biden administration was signaling hesitancy to intervene via the Taft-Hartley Act. Thus, the potential duration of the strike remains uncertain.

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Price vs Fair Value

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UPS is trading at a 462% premium.
Price
$133.01
Fair Value
$361.00
Uncertainty
Medium
1-Star Price
$851.20
5-Star Price
$859.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Despite near-term normalization, UPS' US ground and express package delivery operations should enjoy positive longer-term tailwinds from e-commerce growth.

Bears

Freight diversions seen last year from the Teamsters' strike threat and lingering sluggish retail restocking will create year-over-year volume growth headwinds into the first half of 2024.

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Trading Information

Previous Close Price
—
Day Range
—–—
52-Week Range
—–—
Bid/Ask
— / —
Market Cap
—
Volume/Avg
— / —

Key Statistics

Price/Earnings (Normalized)
18.32
Price/Sales
1.27
Dividend Yield (Trailing)
4.89%
Dividend Yield (Forward)
4.90%
Total Yield
5.33%

Company Profile

As the world's largest parcel delivery company, UPS manages a massive fleet of more than 500 planes and 100,000 vehicles, along with many hundreds of sorting facilities, to deliver an average of about 22 million packages per day to residences and businesses across the globe. UPS' domestic US package operations generate around 64% of total revenue while international package makes up 20%. Air and ocean freight forwarding, truckload brokerage, and contract logistics make up the remainder. UPS is currently pursuing "strategic alternatives" for its truck brokerage unit, Coyote, which it acquired in 2015.
Sector
Industrials
Industry
Integrated Freight & Logistics
Stock Style Box
Large Value
Total Number of Employees
500,000
Website
https://www.ups.com

Competitors

Valuation

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Metric
UPS
FDX
DHL
Price/Earnings (Normalized)
 18.3215.8314.40
Price/Book Value
 6.702.402.07
Price/Sales
 1.270.760.57
Price/Cash Flow
 10.975.756.04
Price/Earnings
UPS
FDX
DHL

Financial Strength

Metric
UPS
FDX
DHL
Quick Ratio
 1.031.150.72
Current Ratio
 1.251.280.90
Interest Coverage
 9.2915.866.02
Quick Ratio
UPS
FDX
DHL

Profitability

Metric
UPS
FDX
DHL
Return on Assets (Normalized)
 8.92%4.84%4.51%
Return on Equity (Normalized)
 34.38%15.67%13.29%
Return on Invested Capital (Normalized)
 15.66%6.92%7.69%
Return on Assets
UPS
FDX
DHL

Integrated Freight & Logistics Industry Comparables

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Morningstar Rating for Stocks
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Market Cap
FedEx Corp
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 ZTO Express (Cayman) Inc ADR
ZTO
XntgxsxrbWkwdkj$21.9 Bil
 Expeditors International of Washington Inc
EXPD
RdlkxxjrrYvhdh$17.7 Bil
 JB Hunt Transport Services Inc
JBHT
NbhmcvxMblqtjk$17.1 Bil
 C.H. Robinson Worldwide Inc
CHRW
ZgslmkkfgVmhm$12.7 Bil
 Landstar System Inc
LSTR
JvhtvfcjxzHwnx$6.5 Bil
 Hub Group Inc Class A
HUBG
BdlckbzwJhhyldl$2.7 Bil

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