Day: February 3, 2010

United Parcel Service (UPS) is currently rated as a Fair Company in my analysis.  The numbers are excellent in certain areas of their operations but their P/E compared to their peers is lower than it should be.  Also, they could stand better growth in Sales as well as better employee productivity.

However, the company is better than many companies and I would never ridicule anyone for owning its stock. I just think there are better companies on the market.

UPS just posted very good returns. If they continue this pace and fix a few other portions of their business, then they will be a Good Company very soon.  The following is from Business First:

United Parcel Service Inc.’s fourth-quarter net income rose 198 percent behind a strong performance from its international package business.

Atlanta-based UPS (NYSE: UPS) said fourth-quarter net income rose to $757 million from $254 million a year earlier. Earnings per share increased to 75 cents from 25 cents during the same period.

UPS’s earnings in the fourth quarter of 2008 included a $548 million goodwill impairment charge in the UPS Freight unit and a $27 million impairment charge in its European package operations.

Fourth-quarter revenue declined 2.5 percent, to $12.4 billion from $12.7 billion. Revenue in UPS’s international package business increased 5.8 percent, to $2.8 billion from $2.7 billion. Revenue in the domestic package operations fell 5.5 percent, to $7.6 billion from $8 billion. Revenue in UPS’s supply chain and freight division fell 1.8 percent, to $2 billion from $2.1 billion.

A consensus of financial analysts polled by Thomson Financial Network had predicted earnings of 74 cents per share on revenue of $12.3 billion.

UPS, which operates its largest international air cargo sorting hub, Worldport, at Louisville International Airport, had an average daily shipping volume of 17.3 million packages per day in the fourth quarter, unchanged from the year-earlier period.

Domestic volume declined to an average of 14.9 million packages per day from 15.1 million packages a year earlier. International volume during the same period increased to 2.4 million packages per day from 2.2 million.

UPS ended 2009 with $2.1 billion in cash and short-term investments.

“UPS ended 2009 on a high note by leveraging network changes implemented throughout the year and executing flawlessly during the peak holiday shipping period,” UPS chairman and CEO Scott Davis said in a news release.

“The company demonstrated its ability to manage effectively in changing market conditions,” he said. “UPS has emerged from the worst recession in decades leaner, more focused and better positioned to take advantage of global trade.”

For the full year, UPS reported net income of $2.2 billion, or $2.14 per share, compared with $3 billion, or $2.94 per share, a year earlier.

Revenue declined to $45.3 billion from $51.5 billion.

For the full year, UPS delivered 3.8 billion packages, an average of 15.1 million per day, down from 15.5 million per day in 2008, according to the release.

UPS predicted full-year 2010 earnings in the range of $2.70 to $3.05 per share.

“Economic forecasts indicate gradual improvement as 2010 unfolds,” UPS Chief Financial Officer Kurt Kuehn said in the release. “The first quarter will be the most challenging of the year for UPS with profitability only slightly better than last year.”