United Parcel Service Inc. (NYSE: UPS) – Q1 FY 2011 Earnings Preview
Monday, April 25, 2011 7:12 PM

The world's largest small-package carrier, United Parcel Service Inc. (NYSE: UPS), is expected to report its first quarter FY 2011 results on April 26, 2011. In the last four quarters ended December 2010, the company's reported EPS exceeded analysts' consensus estimates by margins in the range of 2.90 percent to 22.40 percent.

For the first quarter, analysts' EPS estimates range from a low of $0.79 to a high of $0.91 per share, compared with a consensus estimate of $0.71 per share to $0.85 per share in the year ago quarter. For this quarter, analysts' revenue estimates range from a low of $12.46 billion to a high of $13.07 billion, compared with a consensus estimate of $11.73 billion to $12.71 billion in the same quarter a year ago. For the quarter ended March, 2011, the consensus EPS forecast has been reduced from $0.86 per share, estimated 30 days ago, to $0.85 per share.

In the last 52 weeks, United Parcel Service Inc.'s stock has been trading in the range of $56.47 to $77. The last trading price of the stock was $72.41 on April 14, 2011. On March 10, 2011, analysts at Bank of America/Merrill Lynch reiterated YPS with a buy rating and a price target of $82.

United Parcel Service Inc. is the world's largest express carrier, the world's largest package delivery company and a leading global provider of specialized transportation and logistics services. Its primary business is the time-definite delivery of packages and documents worldwide. The UPS service portfolio also includes global supply chain services and less-than-truckload transportation, primarily in the United States.

In the quarter ended December 2010, UPS reported operating profit of $1.81 billion and earnings of $1.11 per diluted share, representing an increase of 40 percent and 44 percent, respectively, compared with operating profit of $1.26 billion and earnings of $0.75 per diluted share, reported for the fourth quarter FY 2009. Total revenue for the quarter was $13.42 billion, up 8 percent, compared with revenue of $12.38 reported in the FY 2009. For full year 2010, UPS reported total revenue of $49.54 billion, up 9.4 percent compared with revenue of $45.29 billion reported in the previous year.

In a regular update, UPS expects to exceed its previous peak earnings level with 2011 diluted earnings per share within a range of $4.12 to $4.35, an increase of 16 percent to 22 percent over its FY 2010 results.

During the first quarter, UPS's board of directors increased the regular quarterly dividend by 11 percent to $0.52 per share from $0.47 on all outstanding class A and class B shares. The dividend was paid on March 2, 2011, to shareholders of record on Feb. 14, 2011. In January 2008, the Board of Directors approved an increase in our share repurchase authorization to $10.0 billion. As of December 31, 2010, the company had $5.194 billion of its share repurchase authorization remaining. In 2011, the company anticipates increasing its share repurchase activity to approximately $2.0 billion.

United Parcel Service faces fierce competition from another market leader in the air delivery and freight services industry, FedEx Corp. (NYSE: FDX). In the trailing twelve months period, FedEx reported EPS of $4.15 per share on revenue of $38.18, with quarterly revenue growth of 11.10 percent. On the other hand, UPS reported EPS of $3.48 per share on revenues of $49.54, with quarterly revenue growth of 8.40 percent. UPS has a total market capitalization of $72.3 billion. The company has a P/E ratio of 21.05, lower than the industry's average P/E of 23.70. The P/B and P/S ratio of the company is 9.12 and 1.44, respectively, compared with the industry's P/B and P/S ratio of 6.41 and 0.47, respectively. The net profit margin of the company is 8.34 percent, higher than industry's average margin of 5.10 percent. The ROE of the company is 44.31 percent, more than double than that of the industry's ROE of 20.80 percent.



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