Add a New Bears Reason

Company: United Parcel Service (UPS)
Current price:
Headline: (100 character max)
Analysis:
Cancel
82%
agree
299 votes

  UPS faces risk of management flight

For decades UPS management has enjoyed better compensation packages than its competitors--or even management in other industries--but after the 1999 IPO, management has increasingly lost the "culture of ownership" that dominated the company since its founding: after the Enron collapse many in management are reluctant to hold their UPS stock to retirement, as the company encourages. With fewer incentives to stay with UPS, management will bleed to other industries, leaving the remaining management of the company weakened.

(100 character max) Cancel
95%
agree
191 votes

  UPS warns about lower than expected 2nd quarter in 2009

United Parcel Service Inc (UPS) warned that its second-quarter outlook would likely fall below analysts’ expectations and reported lower-than-expected profit as fewer packages shipped amid the global economic downturn, sending its shares down as much as 7.5% yesterday (Thursday), Reuters reported. The U.S. economic bellwether and said that while the economic recovery could begin as soon as the end of this year, it would more likely come in 2010.

(100 character max) Cancel
85%
agree
163 votes

  Too much cost cutting will hurt customers and employes

lots of cost cutting means more packages will not get to the customer when they are suppose to. Lots of cost cutting means even more of a work load on remaining employes not to mention faded uniforms and even dirtier trucks

(100 character max) Cancel
66%
agree
3 votes

  UPS maintains cost-cutting strategy and lays off 260 Pilots

It seems a combination of streamlining the company, to make sure they will run smoother and efficiently, and newer equipment, which require fewer stops and less maintenance overall are the real culprits of this lay off. UPS might be streamlining too much to the point of downsizing.

Most of the over the age of 60 are keeping their jobs, so they can keep retirement privileges they earned working for the company. When they retire, UPS will need to find newer pilots. The majority of the pilots will retire around the same time, so UPS might face a sudden scarcity of pilots.

(100 character max) Cancel
12%
agree
16 votes

  Labor and fuel costs continue to hamper the company's bottom line

Labor and fuel costs continue to hamper the company's bottom line (fuel costs represent only 5-7% of operating expenses each year, too little to be a driver of growth or share price). There is a bright side: UPS is a large investor in alternative fuel vehicle research, and problems with Teamster mismanagement of pensions has left the union with few chips at the bargaining table. Despite this, UPS's fleet will remain gasoline-powered for the foreseeable future and the Teamster union will continue to push labor costs upward.

UPS hasn't made a public pronouncement yet about lower quarterly profit expectations (as opposed to FedEx, which did make an announcement like that on May 12th) and the average quarterly earnings estimate of analysts that follow the company is presently in the range of $0.96 to $1.05 per share this quarter. On an annual basis, UPS is expected to earn around $4.07 per share this year (2008 average estimate of 18 analysts) although this number has been reduced lately from a target of $4.44 per share ninety days ago. Next year's estimates (2009's) have also been cut from a level of nearly $5.00 per share to a standing $4.64 average expectation now. We think there's more downside to these estimates.

Y-O-Y growth in top line sales estimates appears to be around 6% to 7% on UPS current revenue run rate of approximately $52 billion in sales per year. Like FDX, we think that while showing an increase over 2008's fiscal year results, UPS will struggle to maintain its profits or even show profit growth in an environment of such sharply rising fuel costs. We are convinced that margins are going to be compressed in this industry, even if UPS or its competitors try to pass on the costs to consumers with fuel surcharges.

(100 character max) Cancel
6%
agree
15 votes

  UPS faces increased competition from DHL

UPS faces increased competition in its core U.S. market and emerging European market from DHL. While diversifying the company through acquisitions gives it leverage in the expanding global market, it has frequently come at the expense of the quality of the U.S. market that drives its profits.

(100 character max) Cancel
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki