UPS - Embedded Expectations Analysis - 2021 10 22
United Parcel Service, Inc. (UPS:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with a 19.4x Uniform P/E. Even at these levels, the market is pricing in bullish expectations for the firm, and management is confident about domestic volumes, demand capacity, and dynamic pricing.Specifically, management is confident customers went back to brick-and-mortar stores as economies reopened and that they understand where they need to invest to grow internationally. In addition, they are confident they are working at peak levels every day to handle volume and that there will be a demand capacity and balance of about 5 million pieces per day. Furthermore, they are confident dynamic pricing drives customer and service trade-offs to deliver the right product and availability and that bigger ticket items will change the game on the cost piece.
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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