UPS - Embedded Expectations Analysis - 2019 04 05
United Parcel Service, Inc. (UPS:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 22.4x Uniform P/E. At these levels, the market has somewhat bullish expectations for the firm, but management appears concerned about their ability to sustain revenue and earnings growth, automation and technology initiatives, and their product and customer mix.Specifically, management may lack confidence in their ability to sustain high-quality revenue, earnings, and operating profit growth, and may be overstating the strength of their balance sheet. In addition, they may be concerned about their comprehensive peak plans, facility automation, and ability to drive efficiency through operational and back-office technology improvements. Moreover, they may be concerned about their ability to meet the needs of small and medium-sized businesses, and may be exaggerating the quality of their product and customer mix, as well as the returns on strategic growth investments. Also, they may be downplaying concerns about macro headwinds, particularly in Europe, and may be overstating synergies with Marken and global growth opportunities.
United Parcel Service provides transportation services, primarily domestic and international letter and package delivery. The company reports its operations in three segments: United States Domestic Package, which includes the time-definite delivery of letters, documents and packages throughout the United States; International Package, which includes delivery to several countries and territories worldwide, including shipments wholly outside the United States, as well as shipments with either origin or destination outside the United States; and Supply Chain & Freight, which includes the company's Forwarding, Logistics, Coyote, Marken, UPS Mail Innovations, UPS Freight and other aggregated business units.
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