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 ( TheStreet) -- United Parcel Service Inc (UPS) Class B (NYSE: UPS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, relatively poor performance when compared with the S&P 500 during the past year and feeble growth in the company's earnings per share.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 2.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $2,110.00 million or 23.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 3.30%.
- 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, UNITED PARCEL SERVICE INC reported lower earnings of $0.80 versus $3.83 in the prior year. This year, the market expects an improvement in earnings ($5.11 versus $0.80).
- In its most recent trading session, UPS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Air Freight & Logistics industry. The net income has significantly decreased by 341.1% when compared to the same quarter one year ago, falling from $725.00 million to -$1,748.00 million.
-- Written by a member of TheStreet Ratings Staff