Why United Parcel Service (UPS) Stock Is Gaining Today

NEW YORK (TheStreet) -- United Parcel Service (UPS) shares are up 0.4% to $98 on Tuesday after the company announced that it plans on hiring up to 95,000 during the holiday season this year.

The extra work force signals an increase in mail volume that would benefit the package delivery company's bottom line.

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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 few notable 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 revenue growth, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • UPS's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 5.6%. 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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.
  • UNITED PARCEL SERVICE INC has experienced 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 $4.62 versus $0.80 in the prior year. This year, the market expects an improvement in earnings ($4.95 versus $4.62).
  • 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, 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. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The debt-to-equity ratio is very high at 2.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, UPS's quick ratio is somewhat strong at 1.25, demonstrating the ability to handle short-term liquidity needs.
  • You can view the full analysis from the report here: UPS Ratings Report

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