United Parcel Service Stock Analysis

With the stock market still continuing its position at very high points – it has left us dividend value investors to find little-to no room to make a move. There have been flashes of companies taking a few steps back, such as Target (TGT) and Apple (AAPL), but what other companies are out there that may have not been in the public news, but that still look attractive right now?  Well, I received a package in the mail the other day and had a conversation about what industries may be benefiting from low oil prices?  What about shipping companies? Better yet… what about United Parcel Service (UPS)?  Let’s find out.


Intro to United Parcel services, Inc. 

There are 2 major players in the ground shipping, if you exclude the USPS – that is United Parcel Services and FedEx (FDX).  Before we get into UPS, we wanted to bring in the background:

From Google Finance, “United Parcel Service, Inc. is a package delivery company. The company is a provider of global supply chain management solutions. It delivers packages each business day in over 220 countries and territories. The company operates in three segments: U.S. domestic package, international package, and supply chain & freight. The company offers a spectrum of the United States domestic guaranteed ground and air package transportation services. The company’s international package segment includes the small package operations in Europe, Asia, Canada and Latin America, the Indian sub-continent, the Middle East and Africa. UPS offers a selection of guaranteed day and time-definite international shipping services. The supply chain & freight segment consists of the company’s forwarding and logistics services, truckload freight brokerage, UPS freight and its financial offerings through UPS Capital. UPS offers a portfolio of guaranteed and non-guaranteed global air freight services.”

Over 200 countries. They are all over the place.  I was at an airport and I could see one of their flights coming in to ship products.  Just amazing. Further, this comes in at a time when it has occurred again – it has been well over 30 years since I've purchased a stockgetting antsy, just one more time but I will be using our great Dividend Diplomat Stock Screener metrics to boot. Let’s get into the details on UPS, and their competitor FedEx.  

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Kurt Benson 5 years ago Member's comment

What about how #Amazon launched it's own truck shipping company and its 20% stake that it purchased in #AtlasAir last month for air deliveries? Seems to me that they are looking to ditch #UPS. I would think that would be a major threat to the company and it's bottom line. $AMZN $AAWW $UPS

Alexis Renault 5 years ago Member's comment

What percentage of total $UPS deliveries are made up by $AMZN? Is it really that significant?

Harry Goldstein 5 years ago Member's comment

I found a 2013 $UPS 10-K filing with the SEC which stated "No single customer accounts for 10% or more of our consolidated revenue."

Craig Newman 5 years ago Member's comment

Amazon spent $3 billion on deliveries in 2014 and that increased 30% in 2015. Sounds significant to me and will only continue to grow.

Stock Fan 5 years ago Member's comment

Saw this discussion on the homepage activity feed and had to add my 2 cents. @[Craig Newman](user:7650), while that amount is significant, #Amazon only uses #UPS for about 30% of it's deliveries.

Roger Morris 5 years ago Member's comment

30% of #Amazon's $3 billion equates to about $1 billion in revenues for $UPS. #UPS has about $60 billion in revenues so losing $AMZN’s business would reduce UPS’ revenues by only 1.67%. Hardly significant.

Kurt Benson 5 years ago Member's comment

Thanks for all your comments. And while you are all correct, I suspect that $AMZN is looking to vertically integrate and become a competing shipping industry. Just as they decided to become their own web hosting company and became a dominant player in that space. I suspect they will not only drop UPS, but will begin to compete with it. That could crush $UPS.