We've been asking ourselves recently if the market has placed a fair valuation on United Parcel Service. Let's dive into some of the fundamental values of this Large-Cap Industrials company to determine if there might be an opportunity here for value-minded investors.
an Increase in Expected Earnings Improves Its Value Outlook but Its Shares Are Expensive:
United Parcel Service, Inc., a package delivery and logistics provider, offers transportation and delivery services. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 24.03 and an average price to book (P/B) ratio of 2.89. In contrast, United Parcel Service has a trailing 12 month P/E ratio of 12.9 and a P/B ratio of 4.66.
United Parcel Service has moved -31.4% over the last year compared to 15.0% for the S&P 500 — a difference of -46.4%. United Parcel Service has a 52 week high of $145.01 and a 52 week low of $84.28.
The Company's Revenues Are Declining:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $74,094 | $84,628 | $97,287 | $100,338 | $90,958 | $91,070 |
| Gross Margins | 11% | 9% | 13% | 13% | 10% | 9% |
| Net Margins | 6% | 2% | 13% | 12% | 7% | 6% |
| Net Income (M) | $4,440 | $1,343 | $12,890 | $11,548 | $6,708 | $5,782 |
| Net Interest Expense (M) | $653 | $701 | $694 | $704 | $785 | $854 |
| Depreciation & Amort. (M) | $2,360 | $2,698 | $2,953 | $3,188 | $3,366 | $3,609 |
| Diluted Shares (M) | 869 | 871 | 878 | 875 | 860 | 856 |
| Earnings Per Share | $5.11 | $1.54 | $14.68 | $13.2 | $7.8 | $6.75 |
| EPS Growth | n/a | -69.86% | 853.25% | -10.08% | -40.91% | -13.46% |
| Avg. Price | $98.17 | $119.28 | $179.82 | $188.73 | $157.23 | $86.81 |
| P/E Ratio | 19.1 | 76.95 | 12.19 | 14.23 | 20.13 | 12.84 |
| Free Cash Flow (M) | $2,259 | $5,047 | $10,813 | $9,335 | $5,080 | $6,213 |
| CAPEX (M) | $6,380 | $5,412 | $4,194 | $4,769 | $5,158 | $3,909 |
| EV / EBITDA | 10.58 | 11.9 | 10.7 | 11.08 | 12.57 | 7.52 |
| Total Debt (M) | $28,311 | $27,095 | $22,945 | $21,777 | $25,346 | $22,868 |
| Net Debt / EBITDA | 2.27 | 2.04 | 0.81 | 0.99 | 1.77 | 1.39 |
| Current Ratio | 1.11 | 1.19 | 1.42 | 1.22 | 1.1 | 1.17 |
United Parcel Service has generally positive cash flows, positive EPS growth, and healthy leverage levels. However, the firm suffers from slight revenue growth and decreasing reinvestment in the business and slimmer gross margins than its peers. Finally, we note that United Parcel Service has just enough current assets to cover current liabilities, as shown by its current ratio of 1.17.
