UPS has a significant amount of free cash and they have committed a portion of it to ongoing share buybacks. Given the present share value of over $103, what are the opinions of whether this remains a reasonable way to allocate capital expenditures? I know it helps the EPS and decreases the amount of cash to be paid out in dividends but the shares are awfully expensive right now- in fact, near an all-time high. Does anyone know whether the purchases they make are made in some other manner than the regular retail price that individual investors pay? I've always wondered about that...
Mostly are options awarded to management which they have been cashing in a $103 price. By management dropping the ball this Xmas season and no volume in January the stock will crash (my prediction) then ups will buy back there own stock at a discounted price. Employees get restricted shares at a 5% discount but have to hold on to them for 2 years before they can sell them.
I don't know guys but I refer back to my original post. The shares have ended FY 2013 at just over $105. This is near the all-time high. Any seasoned investor will tell you that when a stock is priced near perfection, it is not a good buying opportunity, Any purchasing now that 2014 is under way will obviously not be reflected in the 2013 Q4 earnings call. However, among the many questions analysts will ask will be the capital investments and the share buybacks particularly since the FDX announcement caused their shares to skyrocket. I believe we already have unused but previously allocated dollars that could be applied to a buyback. I'd be OK with making the announcement that the board has approved UP TO a certain amount that could be used for that purpose. I just don't like the prospects of the cost of doing so vs. such things as paying down pension expense, expanding/updating our air fleet, investing more in natural gas infrastructure, acquiring rapidly accretive small companies- things like that.
BTW, I love the story in the news part of the Yahoo UPS site referencing the unfair blame that the big on-line shippers and their customers passed on to both UPS and FDX. An impartial, well-versed consultant who once worked for competitors of both companies came to the defense of UPS and FDX. It's nice to see that vs.the self-serving,blow-hard elected officials who jumped the gun like usual.