UPS a Buy at Current Levels

Discussion in 'The Latest UPS Headlines' started by cheryl, Sep 11, 2008.

  1. cheryl

    cheryl I started this. Staff Member

    UPS a Buy at Current Levels - Zacks

    We are retaining our Buy on United Parcel Service, Inc. (UPS), as the stock continues undervalued, as well as our $75 target price. UPS will report third quarter results on October 23. We are maintaining our EPS estimates for 2008 at $3.60, the midpoint of company EPS guidance of $3.50-3.70 and at $4.15 for 2009.

    While UPS’s projected five-year earnings growth rate matches the median of its peer group, its operating margin, dividend yield and return on equity (ROE) are significantly higher than all of its peers. Superior operating efficiency, balance sheet strength, and ROE justify a premium valuation to the peer group. Therefore, we expect valuation to expand from currents levels. Our price target is $75, based on roughly 17 ¼X our 2009 EPS estimate of $4.15, representing a 21% premium to the peer group.