Stock 7: United Parcel Service (UPS)
Dividend Yield: 2.64%
BRK weighting as of 12/31/2013: 0.01%
Value of holdings: $6.2 million
UPS is a package delivery company headquartered in Atlanta, Georgia. According to the company, it processes and delivers an average 16.3 million packages and documents each day.MUST Read: Warren Buffett's Annual Letter to Shareholders
TheStreet Ratings team rates UNITED PARCEL SERVICE INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED PARCEL SERVICE INC (UPS) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, increase in stock price during the past year and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- UNITED PARCEL SERVICE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITED PARCEL SERVICE INC increased its bottom line by earning $4.62 versus $0.80 in the prior year. This year, the market expects an improvement in earnings ($5.24 versus $4.62).
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Air Freight & Logistics industry average, but is greater than that of the S&P 500. The net income increased by 166.8% when compared to the same quarter one year prior, rising from -$1,748.00 million to $1,167.00 million.
- The gross profit margin for UNITED PARCEL SERVICE INC is currently extremely low, coming in at 12.74%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, UPS's net profit margin of 7.79% compares favorably to the industry average.
- You can view the full analysis from the report here: UPS Ratings Report