UPS

United Parcel Service, Inc. - Ordinary Shares - Class B

Industrial/Transportation, Consumer


Presented:06/08/2022
Price:$179.44
Cap:$156.91B
Current Price:$133.80
Cap:$114.61B

Presented

Date06/08/2022
Price$179.44
Market Cap$156.91B
Ent Value$201.41B
P/E Ratio14.65x
Book Value$17.65
Div Yield2.83%
Shares O/S874.44M
Ave Daily Vol3,469,595
Short Int1.34%

Current

Price$133.80
Market Cap$114.61B
United Parcel Service, Inc. operates as a logistics and package delivery company that provides supply chain management services. Its logistics services include transportation, distribution, contract logistics, ground freight, ocean freight, air freight, customs brokerage, insurance, and financing. The firm operates through the following segments: U.S. Domestic Package, International Package, and Supply Chain Solutions. The U.S. Domestic Package segment offers a full spectrum of U.S. domestic air and ground package transportation services. The International Package segment consists of small package operations in Europe, Asia Pacific, Canada, Latin America and the Indian sub-continent, Middle East and Africa (ISMEA) and offers a selection of day and time definite international shipping services. The Supply Chain Solutions consists of forwarding, truckload brokerage, logistics, UPS Freight, UPS Capital and other businesses. The company was founded by James E. Casey and Claude Ryan on August 28, 1907, and is headquartered in Atlanta, GA.

Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), FedEx Corp (FDX), United Parcel Service Inc (UPS)

Highlights

The presenter is short shares of United Parcel Service Inc (UPS), disagreeing with recent perception that parcel delivery has become a good business. Since the start of the pandemic, UPS has benefited from massive e-commerce demand, as well as pricing leverage beyond ever experienced in parcels. To him, these tailwinds are masking a business that fundamentally sits between consumers who expect immediate and free shipping and retailers who don’t have great margins and don’t want to pay for shipping. The stock is trading at $180 per share, but he values it at $121 per share using an 11x multiple on his 2023 EPS estimate of $11. In contrast, the Street is forecasting 2023 EPS of $13.25, and the presenter attributes 2/3 of that delta to cost inflation and margin assumptions, with the other 1/3 coming from his lower revenue projections. 

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