Research

UPS – Market expectations are for Uniform ROA expansion, but management may be concerned about growth, EPS, and efficiency

  • United Parcel Service, Inc. (UPS:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 23.5x Uniform P/E. At these levels, the market has somewhat bullish expectations for the firm, but management may be concerned about growing their business, their long-term EPS targets, and driving efficiency
  • Specifically, management may be concerned about the strength of their underlying business, and may lack confidence in their ability to sustain recent operating profit growth. Furthermore, they may lack confidence in their ability to continue improving efficiency, and may be concerned about the sustainability of recent air market share growth. Moreover, they may be concerned about slowing global industrial production growth and the sustainability of domestic delivery orders. Additionally, they may be concerned about the sustainability of recent utilization rate improvements, and may lack confidence in their ability to offer 7-day pickup and delivery by January 2020. Finally, they may be concerned about the sustainability of B2B shipment growth, and they appear concerned about their ability to meet their long-term EPS goals.