This much we know. UPS has missed the EPS expectations for 3 of the last 4 quarters. Despite that trend, the share valuation is at a very high level. We have cut the differential between UPS and FDX shares to well under $10. This is quite an accomplishment since we have 3X as many shares outstanding and a 2 point+ higher forward P/E ratio. Clearly the 3% or so dividend vs. the paltry FDX level of .6% has attracted income investors.
Here's the vital metrics for Thursday. EPS is expected to beat last year by a penny. If we beat that number and the revenue # of $13.47B (plus 2.6% over 2012) we'll outperform FDX and most of the companies who have reported to date. If we report improved margins and imply that our going forward expectations remain unchanged we'll have hit the proverbial home run. This might be a lot to ask as we see other large companies having disappointing reports but the fact that no warning was issued around the FDX report time is encouraging. It would be nice to clear the air from our last somewhat muddling quarter with a nice report Thursday morning.
So, a big bearish put bet that expects shares to drop down to the mid $81's. Meanwhile, FDX copies our "UPS my choice" service and we announce a significant expansion to our LNG fleet and 4 re-fueling stations. Interesting goings-on. Perhaps the most telling statistic is the growth of online shopping by 15% vs. a GDP growth of only 1-2%. This is a saving grace for volume although the revenue per piece probably suffers despite the last mile Postal Service partnership. As I posted earlier, the report on Thursday is incredibly hard to predict but in any event should prove superior to FDX's last month. Methinks simply meeting EPS and revenue expectations and reiterating going forward will help us hold steady. A revenue miss by any large margin will bring us back closer to $80. However, one would have thought that if that were in the cards a warning would have been issued last month. Nervous times....
Chemsysus- no, in and of itself it is not evidence of a good report. But, they have warned prior to misses in the past. FDX warned before their most recent report last month. I'm simply saying that if we hit on the 4 cylinders it would be a superior quarter particularly since many other companies are coming up short and curtailing going forward expectations.