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United Parcel Service, Inc. Message Board

  • dudesbag dudesbag Mar 14, 2014 12:41 PM Flag

    How do analysts miss this?

    FDX had an 11% downside miss on last year's Q3 (Dec, Jan, Feb) earnings. That was without the havoc that this winter wrought. The latest expectation is for $1.52 - well up from last year's $1.23. What is curious is that one analyst has them pegged at $1.23 while another a lofty $1.72. I think CitiGroup has it right when they issued a lowered expectation several days ago. In my view, the fact that FDX hasn't done so puts them in a precarious position. Amazingly, they sit not far from their all-time high as no one seems particularly concerned about what they're about to report. Me? I'm baffled.....

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    • Dude while it is wise to know the competition and what they doing to improve their service, increase their revenues and increase EPS in order to stay competitive but being baffled why analysts or FDX doesn’t forward project the short term does nothing to advance your concerns.

      As to each company’s stock price assuming the market will allow each a similar forward P/E multiple then one only has to look what each company will produce in the way of EPS to understand the expected future share price.

      UPS states 2014 EPS will be $5.30 a share
      The Analyst estimates for 2014 are: Low EPS $5.06 - High EPS $5.44 - Mid-point EPS $5.23

      UPS states 2015 EPS will be $6.02 a share
      The Analyst estimates for 2015 are: Low EPS $5.70 – High EPS $6.20 – Mid-point EPS

      I have not focused on what FDX states their EPS for their FY2014 and FY2015 but here is what the analyst estimates are:

      Analyst estimates for FY2014 are: Low EPS $6.63 – High EPS $7.19 – Mid-point EPS $6.95
      Analyst estimates for FY2015 are: Low EPS $8.10 – High EPS $10.38 – Mid-point EPS $8.92

      Assuming a P/E ratio of 20 similar to the current ration for each company and each company's share price for 2014 and 2015 could be expected to be:

      UPS’s based on 2014 company guidance - $106
      UPS’s based on 2015 company guidance - $120.40

      FDX’s based on 2014 analyst mid-point guidance - $139
      FDX’s based on 2015 analyst mid-point guidance - $178.40

      If the above plays out don’t be shocked if in FDX's share price in their FY2015 are at $178.40 and UPS’s share price is at $120.40 a $50.20 share price difference. To get UPS's share price equal to FDX's get UPS’s EPS to the same $8.92 of earnings instead of at their guidance of $6.02 and you will have equalize the share prices.

      The reason for any share price difference will not be that the analysts like Fred and FDX and that they dislike UPS, it will all be about EPS and P/E ratios. If either company falls short of their EPS expect similar in share price.

      • 2 Replies to shiftyinvestor
      • BOTH

      • Shifty- you're sort of making my point. If the results are inferior to the previously announced projections by BOTH FDX and the analysts (and history suggests they will be), the future #'s are somewhat skewed and a downgraded EPS and therefore P/E ratio would result, no? UPS has already paid the price for peak while FDX has yet to do so. I'm simply saying their time will come next week and at the same CC, they'll have to discuss the weathers' impact on January and February. Beyond that, when they had previously projected their results, U.S. GDP was pegged at around a 3% growth. That's been downgraded significantly. So. I guess we'll see what the future holds on Thursday. Actually for me it may present an opportunity since I'm holding some April $95 covered calls I'd like to buy back if we hit a temporary dip in sympathy with FDX's report.

        Sentiment: Buy

    • Just saw the first message under "Headlines" on their website. It says" FDX Boosts Numbers Using Stock Options". All I know is their stock went up over $1.40/share directly following the announcement the other day and UPS dropped over $1.00 (I believe, due to the Ukraine scare). Fred keeps pulling that rabbit out of his magic hat. Either that, or he has excellent Business Advisors. Hope you'll take a look at it and post a comment. Maybe i misinterpreted it.

      Sentiment: Hold

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