FDX vs. UPS

Discussion in 'UPS Discussions' started by airbusfxr, Dec 4, 2009.

  1. airbusfxr

    airbusfxr New Member

    April 15, 2005 UPS was 54.75 per share, FDX was 50.00. Todays price difference is 30 bucks and one companies share has even lost value. My friend dysfunctional manager (on the 2727 thread) says its the unions fault, (pilot and maintenance) but I think it could be something else. All stock, bonds, mutual funds, gold, s&p, etc etc share prices has risen since April, why does UPS/OPL shares lag? What group of people have really caused UPS stock to be valued at Nov 1999 prices?
     
  2. pretzel_man

    pretzel_man Well-Known Member

    Not sure where you are headed with this....

    Its the market that has caused UPS prices to be where it is. Period.

    Why does the market not reward UPS with stock growth? Because UPS is not growing. Growth in EPS will generally cause growth in stock price (assuming the growth matches the market's expectation)

    We need to grow. We need to get our packages back from our non-union competitors.

    P-Man
     
  3. brownmonster

    brownmonster Man of Great Wisdom

    Aggravating customers doesn't seem to be working. Maybe we should try another approach.
     
  4. randomUPSISer

    randomUPSISer New Member

    I'd say it also has a lot to do with UPS managing by divisor. All our upper management seems to know how to do these days is "cut cost". We aren't doing anything to gain that market share back, or to grow. (at least relative to our competitors efforts) I doubt its the pilots, or ESPECIALLY the mechanics. (there really just arent enough mechanics to affect the bottom line even with them getting paid as great as they are )

    When UPS starts taking care of its customers and SPENDING MONEY TO MAKE MONEY, instead of "cutting cost to make profit" we'll see real growth. In the mean time, we sit around with little growth.

    Whose fault is it? Well... its the responsibility of the management committee to grow shareholder value. They are paid REALLY high dollars to do that too. I'd say its their fault. If you're not on the management committee, you are simply enacting what you've been told to do by someone higher up than you. At the end of the day, its their fault. If the shareholders end up unhappy enough, they will be the ones to get the boot, not the pilots, mechanics, lower / mid management, drivers, etc etc.

    What I truly wonder is... since it IS the responsibility of the management committee, and the company stock price just seems to go sideways, Why the F$#@ are they getting raises? They have failed at their primary goal.
     
  5. tarbar66

    tarbar66 Member

    Thanks for your spin on the stock price. It makes me sick to see people willing to pay so much more for FedEx stock. When a share of FedEx gains 5 times what UPS does in a day there is something wrong and the management committee should look in the mirror be ready to tell us why.

    I agree with you that we should be taking care of the customers to gain more, not drive them away. I was always told it is usually cheaper to keep the customers you have than it is to get new ones.
     
  6. SmithBarney

    SmithBarney Well-Known Member

    You have to remember that both companies do alot more than just huck boxes.

    UPS owns a lot of real estate, strip malls etc... (which has bombed in this economy)

    FedEx likes to keep alot of Cash on hand.

    These are just two examples.
     
  7. AIRBUSFXR:

    I think it can be proven that I did not post any messages in 1995.

    I am glad that we are not at each other's throats as we we were a couple of months ago.
    However; I have never said that the Stock price was due to the miniscule "2727" people wanting more than the $43.00 base salary that they already get and want more; more ;more;
    You put this on an open Board... Be careful.....

    Best Regards,

    DOL
     
  8. pemanager

    pemanager Member

    Actually on April 15, 2005 UPS closed at 68.75 and FDX at 83.95. During the past year, FDX sank much further than UPS and is a more variable stock. The one telling point is that the market over the past year has valued UPS more highly with a normalized 12 month p/e ratio of 34.9 (from Forbes) and FDX at 24.7 ( also from Forbes). The actual share price is meaningless if you do not factor in a number of other elements such as the number of shares available.
     
  9. airbusfxr

    airbusfxr New Member

    Actually I meant 2009, this year. When I transcribed the info it went to 2005. What I mean is that in April of THIS YEAR, for the first time UPS stock was more per share. Eight months later FDX is 30 bucks more. Sorry for the incorrect post.
     
    Last edited: Dec 5, 2009
  10. Loufan

    Loufan New Member

    Don't we do more business then fedex? Or if we don't it's about the same right? This is why I don't understand the stock market at all? I know we've lost business and I'm sure fedex has too, but that's a big difference 80-50$
     
  11. pretzel_man

    pretzel_man Well-Known Member

    First, there is no question that the buck is supposed to stop at the management committee. By the way, it is also supposed to stop with all management as well.

    I can tell you that as a management person, I did NOT do enough to get sales leads. Did you? That's what the management committee asked us to do. They asked us to grow the business and get leads.

    By the way, contrary to opinions here service is at an all time high. UPS measures the service of every package and our internal measurement is on end to end service. Its been called the "no excuses" measurement.

    If you look at the MIP elements, service is the only one we hit.

    So, while it is the repsonsibility of the management committee to run the company, management needs to do our job as well.

    P-Man
     
  12. moreluck

    moreluck golden ticket member

    UPS hiring 50,000 seasonals and FDX hiring 14,000 seasonals.
     
  13. pretzel_man

    pretzel_man Well-Known Member

    The big difference is their growth vs. ours.

    P-Man
     
  14. Well, my response was even worse.
    I do not recall ever saying that the Pilot's and Mechanic's union was the cause of our stock being lower than FDX's.
    I don't have the answer, but I can assure you that I and my work group contribute a lot to our operation.
    If you knew what my exact position was, you'd understand why.
    Take a look at the FDX and UPS Yahoo Financial boards and you'll see that no one can really understand it. There are some that think they do, but then there are 1000 opinions.
     
  15. BLACKBOX

    BLACKBOX Life is a Highway...

    I think a lot of the negative outlook for UPS would be their operating costs. Can you imagine what it takes to have a business like this without incurring major capital expenditures? Remember,FDX does not pay for any of its ground contractors expenses. That in itself saves the company millions and that savings is reinvested into the company "it's certainly not redistributed to FDX employees".

    So, on the surface it looks like FDX is expanding and shoring up their International presence all off the backs of hard working Express and Ground drivers who are getting; IMO, lower than industry wages.
     
  16. clueless

    clueless New Member

    imo--you're on the right track and OP's 'dysfunctional' friend has a point--union rules, union wages add to an inflexible cost structure as well as higher costs--wages and benefits. "The Street" takes this into account when valuing a company's stock. A high level of operating cost aka high operational gearing/leverage warrants a higher risk premium therefore a discount in valuation because it reflects greater risk in that cash flow is characterized by higher standard deviation/variance with such a cost structure.

    If you look at the 10-Q's filed by both FDX and UPS for the MRQ's, you will see that UPS' compensation and benefits comprise 57% of revenues whereas FedEx's only compromise 42%

    Also, we had a discussion a few weeks ago about the debt levels of UPS vs FDX. Whereas higher operational gearing equates to greater risk inherent in the cost structure, cet par, financial leverage equates to greater risk in the capital structure--higher risk means high risk premium, lower valuation, cet par.

    Both sources of risk are no doubt being taken into account in the current stock price given that there is a greater potential for a hit to earnings accruing to shareholders during poor economic times when either the cost structure or the capital structure is highly leveraged.
     
  17. 1989

    1989 Well-Known Member


    Great points, Fed Ex is still cheaper than UPS. Just as Google $585 is cheaper than Yahoo $15.
     
  18. MrFedEx

    MrFedEx Engorged Member

    If investors really knew how these 2 companies operate, they'd know where to put their money. I have a lot of UPS stock, and none from FedEx.

    UPS will continue to provide excellent service because they have a well-compensated and generally motivated workforce. FedEx can't say that any more. This peak is going to see some major FedEx service meltdowns because they are understaffed and the average Express employee is mediocre compared to their UPS counterpart. We are already seeing problems, and peak isn't even here yet.

    Look for some big shippers to switch back to UPS after the holidays.
     
  19. Just Numbers

    Just Numbers Retired

    Maybe the truth lies inside the pockets of the fedex analysts!!!
     
  20. clueless

    clueless New Member

    The P/E ratio you referenced is known as a 'relative valuation' and you're absolutely correct--this type of value is far more telling of a company's valuation relative to another company than the absolute stock prices. The P/E and similar ratios tell an investor how many dollars 'the market' is willing to pay for, say, a dollar of the company's earnings, its sales, its free cash flow, etc. It should be noted that these ratios are 'double-edged swords'. While a high relative valuation indicates that investors are more highly valuing a particular company's assets, earnings, sales, etc., it also can indicate that the stock is 'overvalued'.

    This is how UPS fares relative to FDX.

    P/E Ratio (TTM)--Yahoo--UPS 'more expensive/higher valued'
    UPS 35.22
    FDX N/A (note: ttm earnings negative)

    12 Month Normalized P/E Ratio--Forbes--UPS 'more expensive/higher valued'
    UPS 34.9
    FDX 24.7

    PEG (5 yr expected)--Yahoo-- FDX 'more expensive/higher valued'
    UPS 3.37
    FDX 4.36

    Price to Sales (TTM)--Reuters-- UPS 'more expensive/higher valued'
    UPS 1.26
    FDX 0.82

    Price to Book (MRQ) --Reuters-- UPS 'more expensive/higher valued'
    UPS 8.23
    FDX 2.00

    Price/Tangible Book Ratio--Forbes--UPS 'more expensive/higher valued'
    UPS 13.17
    FDX 2.38

    Price/Cash Flow Ratio--Forbes--UPS 'more expensive/higher valued'
    UPS 16.9
    FDX 14.7

    Price/Free Cash Flow Ratio--Forbes--FDX 'more expensive/higher valued'
    UPS 25.6
    FDX 249.8

    However, I think the OP is referencing the run in the stock prices during the last year. Using the Forbes data-- UPS' current price is 'only' 52% above its 52-week low of $37.99 whereas FDX's current price is 160% above its 52-week low of $34.02. I believe that's where the concern is. As for me, as an individual investor, while I am concerned as to exactly why the market is reluctant to push UPS' stock to higher levels, the current stock price indicates there is more 'room to run'-IOW this level might be a 'buying opportunity.'