United Parcel Service, Inc. (NYSE:UPS): Poised For Long-Term Success?
The most recent earnings announcement United Parcel Service, Inc.'s (NYSE:UPS) released in December 2018 showed that the business endured a slight headwind with earnings declining from US$4.9b to US$4.8b, a change of -2.3%. Today I want to provide a brief commentary on how market analysts view United Parcel Service's earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
See our latest analysis for United Parcel Service
Analysts' expectations for this coming year seems buoyant, with earnings increasing by a robust 36%. This growth seems to continue into the following year with rates reaching double digit 49% compared to today’s earnings, and finally hitting US$7.7b by 2022.
While it is informative knowing the growth rate each year relative to today’s level, it may be more beneficial gauging the rate at which the company is rising or falling on average every year. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of United Parcel Service's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 12%. This means that, we can presume United Parcel Service will grow its earnings by 12% every year for the next few years.
Next Steps:
For United Parcel Service, I've put together three essential aspects you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is UPS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether UPS is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of UPS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
