Is UPS Stock A Good Investment? – (UPS)
United Parcel Service is a company that has been outperforming quarterly estimates consistently. It is likely that UPS will continue to beat estimates into the next quarter, making it a potential stock to watch.
UPS has a history of beating earning predictions. The last two reports on UPS earnings highlight just how well the company is performing in terms of revenue. The logistics company has been increasing by 0.85% (average) across the last two quarters.
Last quarter, UPS delivered an earnings report of $1.94 per share, the analyst prediction was $1.92 per share, meaning that UPS beat out estimates by 1.04%. The quarter before that, UPS beat earnings estimates by 0.65%.
UPS Stock Prediction
UPS earnings estimates have been increasing, which is a great sign for investors.
As trade tension decreases and global macroeconomic become stable, UPS stock price benefits. The rise in UPS stock price can be negatively impacted by trade-war talks and potential tariffs.
Last Thursday saw UPS announce its latest changes to its core business. One of the largest changes was a $20 billion capital expenditure plan. With this $20 billion, UPS intends to add more than 70 new projects for packaging facilities. UPS will also be opening seven new “super hub” assortment facilities. These new factories will be automated, increasing efficiency by over 30% when compared to non-automated facilities. This increase in efficiency will help margins, making UPS stock more attractive to investors.
The company’s plan is set to save UPS around $1 billion and increase earnings per share to $1.20 in 2022.
In summary, UPS stock price is impacted by trade policies, with margin improvement subject to change.
I currently give UPS stock a “HOLD” rating
UPS Future Growth
When customers ship their packages with UPS, the company says it earns much more revenue and profit compared to its rivals. UPS management has announced plans for the company to work with more profitable customers. By working with millions of packages from large-volume shippers, the UPS margin has been tight. Which impacts the UPS stock price.
UPS is looking to grow its market share in international markets. The company is also hopeful with the growth of its U.S e-commerce market, which will increase profits. UPS’s main focus for the future is to improve on revenue per piece and is looking to impose higher charges on large packages.
The company is lowering costs in order to offset recent investments which are costly to say the least.
In terms of management, UPS has hired outside executives to bring new direction into the company. In 2017, UPS hired Walmart Inc. exec, Scott Prince, as transformation officer. Prince recently acknowledged international e-commerce as a “megatrend” with “tremendous opportunity” in the area. CMO, Kevin Warren, expects a 28% increase in cross-border e-commerce in the next three years. Business to business e-commerce sales are set to reach $1.2 trillion by 2021.