Tags: ups | delivery | packages | fedex | economy | us

UPS Delivers a Strong Global Stock

By    |   Thursday, 28 Apr 2011 01:03 PM

You know a company has a rock-solid business when it handles goods accounting for 6 percent of U.S. gross domestic product (GDP) and 2 percent of global GDP in its trucks and planes.

That’s the workload for United Parcel Service (UPS), the world’s largest package-delivery company. It delivers an average of 15 million packages every day, and does it well.

By all accounts, it has extremely reliable delivery, thanks to dedicated drivers and high-tech package-tracking systems. Its profit margins top those of its peers. UPS had an operating margin of 11.9 percent in 2010, compared to 5.7 percent for FedEx.

So UPS is definitely a stock to consider as economic recovery creates demand. The package-delivery company reported that profit soared 66 percent in the first quarter, to $885 million from $533 million a year earlier, beating analysts’ estimates. Revenue climbed 7.3 percent to $12.6 billion.

Rising prices and productivity, along with consumers’ preference for more-expensive services, helped the company offset the surge in fuel costs. Strong overseas demand led the way for UPS in the first quarter. While daily deliveries in the U.S. dipped to 12.7 million from 12.73 million a year earlier, overseas deliveries increased to 2.3 million from 2.2 million.

With UPS expecting the global economy to grow faster than in the United States, it added flights to take advantage of the trend, such as a direct route between Hong Kong and Europe.

"UPS produced strong first-quarter results despite rapidly rising fuel costs and challenging weather conditions," CEO Scott Davis said in a statement. "Once again we demonstrated the strength of our global portfolio and ability of our integrated operating model to further expand margins."

The company expects earnings per share to hit a record between $4.15 and $4.40 for all of 2011, compared to its prior range of $4.12 to $4.35.

Barclays Capital analysts have an “overweight” rating on UPS stock and recently raised their target price to $96 from $87.

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You know a company has a rock-solid business when it handles goods accounting for 6 percent of U.S. gross domestic product (GDP) and 2 percent of global GDP in its trucks and planes. That s the workload for United Parcel Service (UPS), the world s largest package-delivery...
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2011-03-28
Thursday, 28 Apr 2011 01:03 PM
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