Stock Research and Analysis

by Keith Schoonmaker, CFA

Bulls Say

UPS is the largest player in a business where network size matters, both in reaching the most recipients on the planet and in spreading costs over a larger volume of packages.
In addition to volume growth, the firm benefits from steadily increasing prices because UPS and other integrated shippers practice rational pricing.
In addition to handling greater parcel density, UPS uses many of its assets to handle both express and ground shipments, earning greater margins compared with other parcel shippers. Read more 

Bears Say

Mix is increasingly B2C for online shopping fulfillment, and we believe this will continue to grow. We think these packages are higher cost to deliver than B2B shipments due to lighter weight, fewer packages per stop, and more missed/re-deliveries.
New entrants are unlikely, but several existing competitors vie for the parcel business of UPS clients. The European parcel delivery market is particularly fragmented.
UPS' less-than-truckload segment (about 5% of revenue) exposes the firm to a market in which slowing demand leads many competitors to bid rates down to break-even margins. Read more 

Management

Overall, UPS has good corporate-governance policies, and management has done right by shareholders. Chairman and CEO Scott Davis advanced from the CFO post to take the reins in January 2008. During 2013, UPS paid Davis a base salary of $1.1 million   Read more 

Profile

As the world's largest parcel delivery company, United Parcel Service uses more than 500 planes and 100,000 vehicles to deliver on average 17 million packages per day to   Read more 

Job Report Shouldn't Be a Disappointment 
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