Q4 Preview: Things Are Looking 'UPS' at United Parcel Service
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United Parcel Service, Inc. (NYSE: UPS) is trading higher today ahead of the company's fourth quarter earnings report, expected out before the market opens tomorrow. Shares are up 0.4% this afternoon.
UPS is expected to report EPS of $1.05 on revs of $13.40 billion. Last quarter, the Atlanta, GA-based logistics giant produced EPS of $0.93, excluding certain items, on revs of $12.2 billion, mixed to the consensus EPS of $0.88 and revs of $12.38 billion. Looking back at Q409, UPS posted adjusted EPS of $0.75 on revs of $12.38 billion, both topping views.
Shares gained about 10% through the quarter, to $72.58 at the end of December. The stock is down nearly 2% since then, though it ended 2010 about 28.5% better.
A simple valuation puts UPS with a forward P/E of 17x FY11 EPS estimates, compared to 14.3x for rival FedEx Corp. (NYSE: FDX).
Data from Bloomberg has 21 analysts with a Buy on UPS, 7 with a hold, and none suggesting to Sell. The analyst price target average is $84.50, with a high of $100 and low of $70. Shares have traded in a range of $73.94 - $55.77 over the last 52-weeks.
Summary
UPS is expected to report EPS of $1.05 on revs of $13.40 billion. Last quarter, the Atlanta, GA-based logistics giant produced EPS of $0.93, excluding certain items, on revs of $12.2 billion, mixed to the consensus EPS of $0.88 and revs of $12.38 billion. Looking back at Q409, UPS posted adjusted EPS of $0.75 on revs of $12.38 billion, both topping views.
Shares gained about 10% through the quarter, to $72.58 at the end of December. The stock is down nearly 2% since then, though it ended 2010 about 28.5% better.
A simple valuation puts UPS with a forward P/E of 17x FY11 EPS estimates, compared to 14.3x for rival FedEx Corp. (NYSE: FDX).
Data from Bloomberg has 21 analysts with a Buy on UPS, 7 with a hold, and none suggesting to Sell. The analyst price target average is $84.50, with a high of $100 and low of $70. Shares have traded in a range of $73.94 - $55.77 over the last 52-weeks.
Summary
- Goldman Sachs is looking for UPS to beat consensus views given "improving domestic pricing, continued cost control, and likely strong last minute holiday ordering." Goldman notes that UPS has topped annual targets every year since 2003, save for 2008. Based on that, their looking for a "beat-and-raise" story.
Goldman is aiming for EPS of $1.09 with operating margins of 13.3%. They have UPS on their C-Buy List, with a $90 price target.
- Deutsche Bank is expecting a disappoints Q410 report based on some cost overruns, but guidance for FY11 remains positive. Deutsche is a buyer on any weakness following the report.
Deutsche believes that "the Street will be surprised by Integrator operating margins during this cycle as volumes build." About oil and fuel prices in the quarter, DB says "while oil prices (WTI) have declined roughly 2% YTD, jet fuel prices have moved in the opposite direction (up 10% YTD). Some have indicated that lower inventories of jet fuel coupled with stronger-than-expected demand for middle distillates (i.e. diesel and heating oil) have helped drive the recent rise in jet fuel, and we are currently looking at $25-27/barrel crack spreads, according to our Airlines team."
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