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United Parcel Service: Not The Best, But Still Worth Considering


  • United Parcel Service has generally fared well in recent years, even though financial performance has been rather volatile.
  • The company is experiencing some weakening so far this year, but shares are trading on the cheap.
  • They aren't as appealing as its largest rival, but they are still attractive enough to warrant consideration by investors.
  • Looking for a helping hand in the market? Members of Crude Value Insights get exclusive ideas and guidance to navigate any climate. Learn More »

UPS Posts Strong Quarterly Earnings

Spencer Platt/Getty Images News

If the world population continues to grow and if e-commerce is slated to continue taking up an ever-larger part of our consumer activities, then the package delivery industry should very well make for a great long-term opportunity

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This article was written by

Daniel Jones profile picture

Daniel is an avid and active professional investor.

He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (32)

The article is too optimistic. I expect heavy headwind here which will probably manifest in very bad earning and outlook tomorrow. I see potential for a 20% or steeper drop until end of the year.
good article... bot ups as the ups/spy pair seems to have found support on a 3yr uptrend ... on absolute basis close above 153.09 confirms...am wrong with close below 154.87
Thats a nice article and a very smart title caught my eye.
Reversion to the mean. Volumes will remain historically elevated but the pandemic EPS fluff will be shaken out
The time to have sold was at the end of July. Q2 will be the last quarter to reflect pandemic volumes. It will also be the last quarter of benign economic conditions
Like this from the author:

"Since its founding in 1907, the company has dedicated itself...The company's focus... all sounds like a herculean task, it's because it is. To get to this point, United Parcel Service has had to make significant investments over its entire lifetime."

Yup, you got it. May it continue. Long UPS.
Enjoyed your article.
What would be a good initial investment price for a DG investor
MoneyPig profile picture
No rush to buy here. The stock surged on the pandemic farce and is yet to fully collapse. AMZN didn't disappear either. And it seems certain non-operating "obligations" have an impact on earnings. So, there are liabilities on the balance.

Biggest risk here is overpaying on e-commerce hype.
billrla profile picture
UPS needs to stop forwarding undelivered packages to UPS stores or third-party locations unless the recipient specifically requests this "service." Apparently, UPS offers a lower-cost class of service to shippers that does not allow for re-delivery to the recipient's residential address after one attempt. Unfortunately, the end-cutomers winds up having to chase down his or her package by driving to some inconvenient location.

This is the sort of technology-enable "service" that undermines quality and annoys long-time customers (and shareholders), such as myself.
@billrla the morning UPS initiated this new service utilizing"access points"
The Bloomberg scroll said...
... "UPS’s answer to you not being home? Go fetch it yourself!."

If the driver doesn't complete the delivery on the 1st attempt, profit per piece goes toward zero.
Add the fact of the new competitor Amazon innovating by simply taking a photo (GPS stamp) to successfully complete delivery. So, UPS had to innovate, as well, or follow in creating new industry standards to ensure profits.
Clearview60 profile picture
Have been excited since day 1 when Ms. Tome took over the reigns at UPS.
@Clearview60 agree. A statement by you as to why would be helpful to all.
Long UPS. Fabulous investment with superior management but too expensive right now.
Nice research but what it lacks is have you shipped or received a package between the two? FedEx is always late by a day or two so if I'm picking between the two I'm on UPS.
OverTheHorizon profile picture
Nice work with the numbers but the trend is down. In the long run—if it’s long enough— most stocks go up; unless you’re Sears, Braniff Airlines, Bethlehem Steel etc.
Fedex slashed guidance for 2022 as all metrics were adverse. UPS reaffirmed guidance for 2022.

Do you think there is a reason Fedex trades at a lower multiple?
@Hewes Look at the respective operating margins
@Yanks56 Understood. It was a rhetorical question.
ToHealthWealthWisdomLongevity profile picture
For years it used to be the common wisdom that the non-union status at FedEx was a strong advantage. With the current tight labor market, that appears to have been turned on its head. Much of FedEx's current problems stem right back to its inability to staff its operations, and the low quality of hires that it has to use. In most areas now, the available workers, both unemployed and the potentially poachable by UPS from other lower paying employers, are drawn to the higher wages, better benefits, safer working conditions and more secure prospects for Teamster jobs at UPS. I am seven months away from a secure retirement after forty-six years with one employer: UPS.
@ToHealthWealthWisdomLongevity I am also retired from UPS but after 7 years as a hourly employee I went into management. I was hired the day I got discharged from service. I retired with a fantastic pension at 55 with 36years service and free medical for life . Yes 55 . Ups is strong and hourly are some of the best hard worker in the industry , but also management is well trained. I ran ever operation we had from preloads, hubs package even airline and engineering. We were taught well.I was taught cut cut cut and watch every minutes . I feel comfortable that my investment is in good hands.so do the kids and grandkids.
paulformal profile picture
UPS lost 3 packages. Put in a claim for insured amount $695.00. They never paid it. The portal is horrible to claim. Customer service to call is next to impossible. In business since 1953. I buy my kids UPS stock every year. The drivers are fantastic. But issues like this are ruining the good UPS name.
@paulformal they want you to give up and not pursue the claim. Or at least, recognize that it will will cost you (how much effort are you willing to commit to recovering your due).

The very large shippers are able to hold "them" accountable with technology not available to the common man.
craftbrewinfo profile picture
“They (Ups)aren't as appealing as its largest rival, but they are still attractive enough to warrant consideration by investors.”

FedEx is horrible. Their service has deteriorated since 2019. Not to mention their business metrics.
I’d rather invest in the superior company I.e UPS ( says this 39 year veteran logostician)
UPS is very expensive if we compare to FDX... FDX is safe now....
@Vince Gowda UPS is also the better company. Paying a slightly higher premium for a much better company is fair, in my opinion.
@Vince Gowda FDX is a joke….I live in a very remote area, and they’ve already stopped most of their deliveries out here and pawned them off on the postal service, which is strange because we used to see the fed ex drivers several times per week.
It sure looks to me like they’re cutting back on drivers, and contractors
AspiretoRetire profile picture
@Trevor42 Completely correct. UPS has outperformed FedEx over almost every time period because, on nearly any measure that determines the multiple that investors will pay, UPS outperforms FedEx. Buying FedEx because it’s cheaper is foolish. It should be cheaper.

The looming recession worries me more than the competition. It’s hard to see UPS doing well in a recession, and I wouldn’t buy now. Long term, however, it’s a solid investment.
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