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United Parcel Service, Inc. Message Board

  • dudesbag dudesbag May 3, 2014 5:39 PM Flag

    UPS vs FDX on share price and P/E

    FDX has missed the last 2 quarters and barely beat by 3 cents before that. The expectations are for a blow out 4th quarter to end their 2014 FY. So, they need to earn $2.36 in March, April and May. We know the GDP # was lousy and weather has still been a problem. Personally, I would expect them to come around $2.20 which would give them a yearly EPS of $6.52. At their present share price of $137, that's a P/E of 21. Their problem might be the FY 2015 expectations. Somehow, analysts still expect them to reach the lofty number of $8.86. A P/E of 21 applied to that is $186. I'd be thinking $7.80 is more like it and would give a 12-month target of $164- still a nice gain from $137. UPS meanwhile is sitting on a lower P/E of 19.4%. So, if we move ours to say 20, and use analyst expectations we get $5.08 X 20 = $101.60 for year end 2014 and $5.90 X 20 = $118 for year end 2015. I'm good with that and believe that our expectation is well within reason while FDX' # is based upon almost everything going right. That hasn't happened in some time.

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    • To add a bit more flavor. Those whacky guys at Motley Fool have written some more on FDX recently. What struck my eye was some details they provided on the slowing revenue growth. For the 5 years ended 2013 FDX revenue growth averaged 3.14%. This year, FY 2014 ending in May, they're looking for a 2.5% increase. Somehow, FY 2015 (also ending in May) is projected to come in at a 4.8% revenue increase or well beyond anything they've come close to in the last 6 years. This is the kink in their armor. As we all know, revenue is the life blood of EPS along with optimized margins. Pipe dreams about outrageous revenue growth based upon yet to be realized economic stimulation are not. A 12 month target of FDX somewhere around $150 and UPS about $110 seem like reasonable numbers although another less than average report by FDX might close the gap a bit.

 
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110.96+0.03(+0.03%)Dec 19 4:03 PMEST

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