Opinions
Ross Healy
United Parcel Services
UPS-N
DON'T BUY
Dec 05, 2017
Stock price when the opinion was issued
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A dividend pick for 2025. Is down a lot from their highs. A contrarian play. It pays around a 5% dividend yield. It trades at a reasonable valuation and offers decent earnings growth in 2025 of 5-7%. Collect the dividend and enjoy a little capital appreciation on top. You won't shoot the lights out, but you can relax with this steady earner.
Premium contentUnited Parcel Service, Inc. (UPS) is a package delivery company. The Company is a provider of global supply chain management solutions. The Company operates through three segments: U.S. Domestic Package operations, International Package operations, and Supply Chain & Freight operations. As of December 31, 2016, the Company delivered packages in over 220 countries and territories. The Company offers a spectrum of the United States domestic guaranteed ground and air package transportation services. The International Package segment includes the small package operations in Europe, Asia-Pacific, Canada and Latin America, the Indian sub-continent, the Middle East and Africa. The Supply Chain & Freight segment includes its forwarding and logistics services, truckload freight brokerage, UPS Freight and its financial offerings through UPS Capital. The Company serves the global market for logistics services, which include transportation, distribution, contract logistics and ground freight. Social media mentions are up 2500% in the past 24h.
Transport stocks in general have been weak. One of the weakest stocks in the sector. Execution problems. He's the last guy to try to pick a bottom. Yield is 7%, without huge coverage. Doesn't expect dividend cut, but doesn't inspire confidence when entire earnings go to pay the dividend. Stay away.
You want to buy stocks when they're down. A deal at 10.5x PE with 11% growth. Don't have to jump in right now, but he'd sell puts ~$75.
Bad year, tariff uncertainty, high labour costs, elevated capex, high debt. Market didn't like reduction in business with AMZN, but it's a low-margin business. E-commerce continues to grow, looking to expand in Mexico. Thinks earnings will inflect this year. Loves the dividend of 7%.
The balance sheet is taking a sort of a series of steps downwards. That is probably due to the idiots (company?) buying back their own stocks. Looking at the earnings forecasts and FMV, it has been flat lining since they began buying back stock. Because of this, the stock has actually created extra value. It is very expensive, trading at 30X its BV. The FMV is $82 which gives you a 33% downside risk from here. He would be very cautious about this company.