Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- UNITED PARCEL SERVICE INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, UNITED PARCEL SERVICE INC increased its bottom line by earning $3.83 versus $3.47 in the prior year. This year, the market expects an improvement in earnings ($4.59 versus $3.83).
- UPS, with its decline in revenue, slightly underperformed the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 0.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Air Freight & Logistics industry and the overall market, UNITED PARCEL SERVICE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for UNITED PARCEL SERVICE INC is rather low; currently it is at 16.30%. Regardless of UPS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.60% trails the industry average.
- Currently the debt-to-equity ratio of 1.99 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, UPS's quick ratio is somewhat strong at 1.42, demonstrating the ability to handle short-term liquidity needs.
United Parcel Service, Inc., a package delivery company, provides transportation, logistics, and financial services in the United States and internationally. It operates in three segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. The U.S. United Parcel Service Inc (UPS) Class B has a market cap of $51.69 billion and is part of the services sector and transportation industry. The company has a P/E ratio of 21.1, above the S&P 500 P/E ratio of 17.7. Shares are down 2.4% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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