UPS Stock Gained Following Parcel Pro Acquisition

NEW YORK (TheStreet) -- United Parcel Service (UPS) shares closed trading up 0.39% to $100.35 on Tuesday after the parcel mailing service provider announced that acquired logistics firm Parcel Pro for an undisclosed amount.

Parcel Pro provides services and insurance coverage for the transport of jewelry, wristwatches and other luxury goods.

"The increased maximums allow companies to ship more items in one package, which is logistically easier and more cost effective," UPS said in a statement yesterday.

The acquisition is part of the company's increased interest in the business to business delivery sector, according to the Wall Street Journal.

Separately, the company also announced that it was discontinuing some holiday season shipping discounts.

The company reportedly told certain retailers that it is discontinuing free shipping on large items like furniture due to the logjam the items create at the company's sorting centers.

Smaller packages can fit on the company's conveyer belts, however, larger packages like furniture have to be carried by the company's employees.

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, good cash flow from operations, increase in net income and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • UPS's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the 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.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Air Freight & Logistics industry average. The net income increased by 12.6% when compared to the same quarter one year prior, going from $911.00 million to $1,026.00 million.
  • Net operating cash flow has increased to $2,751.00 million or 21.34% when compared to the same quarter last year. In addition, UNITED PARCEL SERVICE INC has also modestly surpassed the industry average cash flow growth rate of 18.62%.
  • UNITED PARCEL SERVICE INC has improved earnings per share by 14.3% in the most recent quarter compared to 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 reported lower earnings of $3.28 versus $4.62 in the prior year. This year, the market expects an improvement in earnings ($5.19 versus $3.28).
  • You can view the full analysis from the report here: UPS Ratings Report

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