S&P cuts UPS' outlook to negative

Discussion in 'The Latest UPS Headlines' started by cheryl, Jan 26, 2010.

  1. cheryl

    cheryl I started this. Staff Member

    S&P cuts UPS' outlook to negative - Marketwatch
    Standard & Poor's Ratings Services on Tuesday lowered United Parcel Service Inc.'s /quotes/comstock/13*!ups/quotes/nls/ups long-term rating outlook to negative from stable and affirmed its AA- rating. "The ratings assume that UPS' focus on improving yields, cutting costs, and a gradual recovery in market conditions, combined with management's commitment to restoring credit metrics, will enable the company to generate FFO to total debt of at least 40% over the next 18 to 24 months," said Christopher DeNicolo, an S&P credit analyst. However, the ratings agency warned that it may downgrade its ratings if the parcel delivery company fails to meet this criteria over the next couple of years.
     
  2. UPS Lifer

    UPS Lifer Well-Known Member

    Not quite sure why S & P would take this approach especially after the SPR. I am lost on this one! Sometimes I think that UPS stock is doomed to stay below $60 a share.
     
  3. clueless

    clueless New Member

    Here's the actual ratings action from S&P:

    Ratings On United Parcel Service Inc. Affirmed; Outlook Revised To Negative

    United Parcel Service Inc.'s (UPS) credit metrics have deteriorated over
    the past year due to profit pressures related to the global economic
    downturn and a large increase in unfunded postretirement obligations.
    In response, the company has taken measures to cut costs and improve
    operating performance. It also has curtailed share repurchases to bolster
    its financial profile.

    We are affirming the ratings on UPS, including the 'AA-' corporate credit
    rating and 'A-1+' commercial paper rating.

    We are also revising the outlook to negative from stable to reflect our
    intention to lower ratings if funds from operations (FFO) to total debt
    (adjusted for off-balance sheet items) fails to improve to at least 40%
    over the next 18 to 24 months. Over the longer term, we expect FFO to
    total debt to return to the 50% level.

    NEW YORK (Standard & Poor's) Jan. 26, 2010--Standard & Poor's Ratings Services
    today affirmed its ratings on United Parcel Service Inc. (UPS), including the
    'AA-' corporate credit rating and 'A-1+' commercial paper rating. We also
    revised the long-term rating outlook to negative from stable.

    The ratings on Atlanta-based UPS reflect its very strong position in
    ground parcel delivery and substantial earnings and cash flow. UPS' adoption
    in early 2008 of a somewhat more aggressive (albeit still conservative)
    capital structure, and its participation in a competitive industry with some
    exposure to cyclical demand pressures somewhat offset these strengths. UPS
    benefits from its position as the leading provider of ground package delivery
    in the U.S. and from its significant presence in domestic air express package
    delivery, international package delivery, and logistics services.

    "The ratings assume that UPS' focus on improving yields, cutting costs,
    and a gradual recovery in market conditions, combined with management's
    commitment to restoring credit metrics, will enable the company to generate
    FFO to total debt of at least 40% over the next 18 to 24 months," said
    Standard & Poor's credit analyst Christopher DeNicolo. Failure to do so could
    result in rating downgrades. "We could revise the outlook back to stable if
    these actions result in FFO to total debt improving to 40% and we believe it
    will stay there and approach the 50% area," he continued.


    http://www.standardandpoors.com/prot/ratings/articles/en/us/?assetID=1245205388803
     
  4. Brown Wrench

    Brown Wrench New Member

    This is typical for the financial market folks. As everyone knows, the stock brokerage houses, stock brokers and traders all fail to make money if we don't trade our shares. Hence the constant upgrade and downgrade of ALL stocks. It entices those who don't base their decisions on their own research, but the word of analysts that are paid to change their opinions on stocks!! Viola, downgrade=everyone sells=the brokers make bank, upgrade, everyone buys so they can sell next time the stock is downgraded!!
    If no one would have panicked last year, the markets would have been stable.. Amazing but true!!!
     
  5. UPS Lifer

    UPS Lifer Well-Known Member

    This makes a lot of sense. The brokers make money whether you sell or buy.