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Category: Stock Market and UPS
Date: 5 July 2020 Stock Price of UPS: $114.36 We take a look at the 1st quarter earnings release of their 2020 fiscal year of United Parcel Service (UPS) one of the world's leading logistics services companies, with 1st quarter 2020 revenues topping $18 billion. Question is how hard has the company been hit by the Covid-19 pandemic that has spread across the globe like wildfire ?
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I want to thank all 495,000 UPSers for their extraordinary efforts to leverage the full power of our global network in the fight against the coronavirus pandemic, keeping critical goods moving for businesses and consumers globally - said David Abney, UPS chairman and CEO"
About United Parcel Service (UPS)
UPS (NYSE: UPS) is a global leader in logistics, offering a broad range of solutions including transporting packages and freight; facilitating international trade, and deploying advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide. UPS was awarded America’s Best Customer Service company for Shipping and Delivery services by Newsweek magazine; Forbes Most Valuable Brand in Transportation; and top rankings on the JUST 100 list for social responsibility, the Dow Jones Sustainability World Index, and the Harris Poll Reputation Quotient, among other prestigious rankings and awards
Overview UPS 1st quarter 2020 earnings report
The numbers we are interested in (for the quarter):
- Revenue: $18.035 billion (up by 5.1% compared to $17.16 billion from the same quarter of the previous year)
- Cost and expenses: $16.963 million (up by 7.6% compared to $15.766 billion for the same quarter of the previous year)
- Net income: $965 million (down from $1.11 billion for the same quarter of the previous year)
- Diluted earnings per share: $1.15 (down from $1.39 for the same quarter of the previous year)
- Number of shares in issue: 869 million
- Cash and cash equivalents of UPS: $9.46 billion (up from $5.74 billion for the same quarter of the previous year)
- Cash and equivalents per share: $10.88
- Cash and equivalents makes up 9.5% of UPS' current market capital
- Cash and equivalents makes up 15.5% of UPS's total assets
- Stockholders equity of United Parcel Service: $3.313 billion
- Stockholders equity per share: $3.81
- UPS is trading at 30 times its stockholders equity per share. It is trading well outside the expected range as most firms tend to trade at levels between 2 and 4 times its stated stockholders equity per share.
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
- Cash generated from operations : $2.55 billion
- Cash generated from operations per share: $2.93
UPS' management commentary on their 1st quarter 2020 earnings
ATLANTA, April 28, 2020 (GLOBE NEWSWIRE) -- UPS (NYSE:UPS) today announced first-quarter 2020 diluted earnings per share of $1.11 and adjusted diluted earnings per share of $1.15. The company’s results were adversely affected by the disruption to customers from the global coronavirus pandemic.
UPS has been designated by governments around the world as a Critical Infrastructure Business and continues to operate in all major countries, while adhering to additional regulatory requirements. In the U.S., the company is also front and center in leading the pandemic logistics response for the Federal Emergency Management Agency (FEMA) and other federal and state government agencies. As a logistics leader, UPS is supporting FEMA and its Project Airbridge by managing charter flights around the globe. UPS has delivered several million pounds of Personal Protective Equipment for FEMA into dedicated UPS distribution space. In addition, as part of FEMA’s Project Airbridge and other healthcare-related missions, in April the company increased the number of flights by over 200 to transport critical life-saving cargo to the U.S. and Europe.
UPS has been designated by governments around the world as a Critical Infrastructure Business and continues to operate in all major countries, while adhering to additional regulatory requirements. In the U.S., the company is also front and center in leading the pandemic logistics response for the Federal Emergency Management Agency (FEMA) and other federal and state government agencies. As a logistics leader, UPS is supporting FEMA and its Project Airbridge by managing charter flights around the globe. UPS has delivered several million pounds of Personal Protective Equipment for FEMA into dedicated UPS distribution space. In addition, as part of FEMA’s Project Airbridge and other healthcare-related missions, in April the company increased the number of flights by over 200 to transport critical life-saving cargo to the U.S. and Europe.
“I want to thank all 495,000 UPSers for their extraordinary efforts to leverage the full power of our global network in the fight against the coronavirus pandemic, keeping critical goods moving for businesses and consumers globally,” said David Abney, UPS chairman and CEO. “The world is counting on UPS more than ever before as we support the people on the front lines of this crisis and our customers with speed, ingenuity and reliability.”
Outlook
At this time, UPS is unable to predict the extent of the business impact or the duration of the coronavirus pandemic, or reasonably estimate its operating performance in future quarters. As a result, the company is withdrawing its previously issued 2020 revenue and diluted earnings per share growth guidance. UPS has taken steps to ensure it remains strong and resilient throughout this period, including:
Outlook
At this time, UPS is unable to predict the extent of the business impact or the duration of the coronavirus pandemic, or reasonably estimate its operating performance in future quarters. As a result, the company is withdrawing its previously issued 2020 revenue and diluted earnings per share growth guidance. UPS has taken steps to ensure it remains strong and resilient throughout this period, including:
- The company expects 2020 capital expenditures will be reduced by approximately $1 billion from previous estimates.
- UPS is suspending share buybacks for 2020, reducing its planned full-year repurchase target by approximately $783 million.
United Parcel Service (UPS) stock price history
The image below, obtained from Google, shows the stock price history of United Parcel Service (UPS) over the last 5 years. And its been a good time for UPS stockholders. 5 years ago the stock of UPS was trading at $97 a stock, and its currently it's trading at $114.36
Thats a decent return of 17.8% provided to UPS stockholders over the last 5 years. The stock of UPS trading at a lot closer to its 52 week high of $125.31 than it is to its 52 week low of $82 which to us is a clear indication that the short term sentiment and momentum of the stock is relatively positive at this point in time.
Thats a decent return of 17.8% provided to UPS stockholders over the last 5 years. The stock of UPS trading at a lot closer to its 52 week high of $125.31 than it is to its 52 week low of $82 which to us is a clear indication that the short term sentiment and momentum of the stock is relatively positive at this point in time.
Recent coverage of United Parcel Service (UPS)
The extract below covers the latest earnings reported by FedEx as obtained from Fool.com
What happened
Shares in United Parcel Service (NYSE:UPS) rose 11.5% in June, according to data provided by S&P Global Market Intelligence. In common with its direct peer FedEx (NYSE:FDX), which rose 7.4% in June, UPS stock had a good month on the back of a growing realization that transportation demand had bottomed in April
Indeed, this was a viewpoint that was confirmed by FedEx when it gave its fourth quarter earnings at the end of June. FedEx's chief marketing and communications officer Brie Carere noted that "we have experienced week-over-week improvement in our business since hitting the bottom in mid-April" during the company's earnings call. Moreover, the Association of American Railroads believes that a recovery in rail traffic began in early May and accelerated through June.
Everything points to a gradual improvement in the industrial economy. That's good news for a transportation stock like UPS because business deliveries tend to be higher-margin work. Meanwhile, it's well understood that the COVID-19 pandemic has caused a surge in e-commerce deliveries in the business to consumer (B2C) market.
So what
The gradual improvement in the business to business (B2B) market encourages UPS investors to believe that B2B activity will start to normalize toward previous levels. Meanwhile, the surge in B2C deliveries caused by the coronavirus pandemic will result in a structural shift in demand which UPS and FedEx can start to take advantage of through better pricing strategy and increasing productivity in their networks. Both companies have made substantive investments in upgrading and expanding their networks in recent years.
Read the full article here
What happened
Shares in United Parcel Service (NYSE:UPS) rose 11.5% in June, according to data provided by S&P Global Market Intelligence. In common with its direct peer FedEx (NYSE:FDX), which rose 7.4% in June, UPS stock had a good month on the back of a growing realization that transportation demand had bottomed in April
Indeed, this was a viewpoint that was confirmed by FedEx when it gave its fourth quarter earnings at the end of June. FedEx's chief marketing and communications officer Brie Carere noted that "we have experienced week-over-week improvement in our business since hitting the bottom in mid-April" during the company's earnings call. Moreover, the Association of American Railroads believes that a recovery in rail traffic began in early May and accelerated through June.
Everything points to a gradual improvement in the industrial economy. That's good news for a transportation stock like UPS because business deliveries tend to be higher-margin work. Meanwhile, it's well understood that the COVID-19 pandemic has caused a surge in e-commerce deliveries in the business to consumer (B2C) market.
So what
The gradual improvement in the business to business (B2B) market encourages UPS investors to believe that B2B activity will start to normalize toward previous levels. Meanwhile, the surge in B2C deliveries caused by the coronavirus pandemic will result in a structural shift in demand which UPS and FedEx can start to take advantage of through better pricing strategy and increasing productivity in their networks. Both companies have made substantive investments in upgrading and expanding their networks in recent years.
Read the full article here
United Parcel Service (UPS) latest stock valuation
So based on FedEx (FDX) latest earnings report and their outlook provided what do we value FedEx's stock at? Based on their latest earnings and the outlook provided by the group our target price (full value price) for FedEx at $162.10 a stock (up slightly from our 1Q 2020 earnings report review of FedEx). We therefore believe the stock of FedEx is undervalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $162.10 Therefore we believe the a good entry point into the stock is below $145.90. We expect the stock of FedEx to kick up in coming weeks and months to levels closer to our target price.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $162.10 Therefore we believe the a good entry point into the stock is below $145.90. We expect the stock of FedEx to kick up in coming weeks and months to levels closer to our target price.
Next earnings release of United Parcel Service (UPS)
It is expected that Unite Parcel Service (UPS) will release their 2nd quarter 2020 earnings report in late July 2020