FedEx Corporation (NYSE:FDX) versus United Parcel Service (UPS) Critical Review

United Parcel Service (NYSE: UPS) and FedEx Corporation (NYSE:FDX) are both large-cap transportation companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, institutional ownership and analyst recommendations.

Risk and Volatility

United Parcel Service has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, FedEx Corporation has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500.

Valuation & Earnings

This table compares United Parcel Service and FedEx Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
United Parcel Service $62.92 billion 1.56 $7.85 billion $4.07 27.85
FedEx Corporation $60.32 billion 0.92 $8.28 billion $11.06 18.63

FedEx Corporation has higher revenue, but lower earnings than United Parcel Service. FedEx Corporation is trading at a lower price-to-earnings ratio than United Parcel Service, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and price targets for United Parcel Service and FedEx Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Parcel Service 0 10 5 0 2.33
FedEx Corporation 0 4 19 0 2.83

United Parcel Service presently has a consensus price target of $114.31, indicating a potential upside of 0.85%. FedEx Corporation has a consensus price target of $221.88, indicating a potential upside of 7.71%. Given FedEx Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe FedEx Corporation is more favorable than United Parcel Service.

Profitability

This table compares United Parcel Service and FedEx Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Parcel Service 5.68% 417.18% 13.38%
FedEx Corporation 4.97% 22.19% 7.10%

Dividends

United Parcel Service pays an annual dividend of $3.32 per share and has a dividend yield of 2.9%. FedEx Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 1.0%. United Parcel Service pays out 81.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FedEx Corporation pays out 18.1% of its earnings in the form of a dividend. United Parcel Service has increased its dividend for 7 consecutive years and FedEx Corporation has increased its dividend for 7 consecutive years.

Institutional and Insider Ownership

52.9% of United Parcel Service shares are held by institutional investors. Comparatively, 76.0% of FedEx Corporation shares are held by institutional investors. 0.6% of United Parcel Service shares are held by insiders. Comparatively, 8.7% of FedEx Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

FedEx Corporation beats United Parcel Service on 9 of the 16 factors compared between the two stocks.

United Parcel Service Company Profile

United Parcel Service, Inc. (UPS) is a package delivery company. The Company is a provider of global supply chain management solutions. The Company operates through three segments: U.S. Domestic Package operations, International Package operations, and Supply Chain & Freight operations. As of December 31, 2016, the Company delivered packages in over 220 countries and territories. The Company offers a spectrum of the United States domestic guaranteed ground and air package transportation services. The International Package segment includes the small package operations in Europe, Asia-Pacific, Canada and Latin America, the Indian sub-continent, the Middle East and Africa. The Supply Chain & Freight segment includes its forwarding and logistics services, truckload freight brokerage, UPS Freight and its financial offerings through UPS Capital. The Company serves the global market for logistics services, which include transportation, distribution, contract logistics and ground freight.

FedEx Corporation Company Profile

FedEx Corporation (FedEx) provides a portfolio of transportation, e-commerce and business services through companies competing collectively, operating independently and managed collaboratively, under the FedEx brand. The Company’s segments include FedEx Express, TNT Express, FedEx Ground, FedEx Freight and FedEx Services. The FedEx Express segment offers a range of the United States domestic and international shipping services for delivery of packages and freight. TNT Express segment collects, transports and delivers documents, parcels and freight on a day-definite or time-definite basis. The FedEx Ground segment provides business and residential money-back guaranteed ground package delivery services. The FedEx Freight segment offers less-than-truckload (LTL) freight services. The FedEx Services segment provides its other companies with sales, marketing, information technology, communications, customer service and other back-office support.

What are top analysts saying about United Parcel Service Inc.? - Enter your email address in the form below to receive our free daily email newsletter that contains the latest headlines and analysts' recommendations for for United Parcel Service Inc. and related companies.

Comments

Leave a Reply


share news on Facebook
tweet this investment news
share on linkedin
share on StockTwits
share on Google Plus
share on reddit