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United Parcel Service: What Does CEO’s Appointment as Board Chairman Mean for Company?

Under David Abney’s lead, the logistics giant has witnessed consecutive annual growth in both the international and domestic market

United Parcel Service, Inc. announced on Wednesday that it has unanimously elected CEO, David P. Abney, as new Board Chairman. His predecessor, Scott Davis, will retire from the position at the 2016 annual board meeting.

The decision is part of a strategy to augment growth for the logistics giant, which also includes refocus on improved customer service. The CEO said that the corporation will continue to expand internationally, increase global e-commerce, and accelerate growth in specialized markets.

5 Takeaways From the United Parcel Service Conference Call – Motley Fool

The takeaway
All told, UPS’ delivery during peak has helped derisk the stock, and underlying revenue improvements should start to shine through provided oil prices don’t continue to fall sharply. Investors shouldn’t worry too much about Amazon, because UPS isn’t purely seeking e-commerce volume.

Moreover, the investment thesis on UPS isn’t just about growing e-commerce revenue, it’s also about the company’s ability to deliver, and given the $5 billion in free cash flow in 2015 (representing 5.2% of its enterprise value), I would argue that the stock looks a little undervalued at $97.

 

Bernstein Relieves Amazon Entry Fears for FedEx Corporation, UPS Investors – BidnessEtc

Bernstein analyst David Vermon attributed the beginning of investors’ worries to Amazon.com, Inc.’s (NASDAQ:AMZN) move to set up 23 sortation centers across the country. He assured investors that the company was not entering the ground delivery business, the stronghold for FedEx and United Parcel Service, Inc. (NYSE:UPS).

Moreover, the bank noted that the e-commerce giant was insourcing postal injection operations, and not entering the ground delivery business. Mr. Vermon further noted that the corporation would have to operate in the densest areas to operate profitably, and carried an overall disadvantage against FedEx and UPS—limiting the marginal risk that Amazon’s moves posed to them. He added: “Amount of marginal Amazon volume at risk is low as expansion constrained by route economics / population density, and daily delivery requirement. As a competing service, low commercial appeal.”

Why Amazon Needs to Dump UPS and Fedex – Investopedia


Seldom is there a company that’s as dependent on others as Amazon.com Inc (AMZN) is dependent on Fedex Corp (FDX) or United Parcel Service Inc (UPS). The e-commerce giant sends out over 300 million packages a year and spent $13 billion on fulfillment costs in fiscal 2015. With fast shipping such a key component of Amazon’s business, shareholders should demand a fail-proof shipping service that is scalable and can handle Amazon’s future growth. Neither Fedex nor UPS can provide that service.

The Best E-Commerce Stock Is Not Amazon – Forbes

When most people think of e-commerce, the first name that leaps to mind is Amazon.com (AMZN). There’s good reason for that: according to Macquarie Research, the retail giant accounted for more than half of all e-commerce growth last year.

Put another way, of every extra dollar Americans spent online in 2015, $0.51 went to Amazon. But be that as it may, Amazon, with its razor-thin profit margins, lack of a dividend and nosebleed P/E ratio of 426, is far from my favorite way to play this trend.

Instead, I prefer a “pick-and-shovel” company that’s about as old school as they come: the 109-year-old United Parcel Service (UPS).