Why UPS Delivered a Decent 2012 to Investors

2012 is nearing its end, and now's a good opportunity to look at what happened throughout the year to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.

Today, I'll look at UPS (NYSE: UPS  ) . The delivery company is sensitive to overall global economic conditions, so as you'd expect, a slow-growth environment with worries about the sustainability of emerging-market strength helped hold the stock back this year. But as the economy seems to pick up, UPS' prospects may improve. Below, you'll find more on what moved shares of UPS this year.

Stats on UPS

Year-to-Date Stock Return

5.4%

Market Cap

$71.4 billion

Revenue, past 12 months

$53.7 billion

Net Income, past 12 months

$3.28 billion

1-Year Revenue Growth

2.6%

1-Year Net Income Growth

(19%)

Dividend Yield

3%

CAPS Rating

****

Source: S&P Capital IQ.

How did UPS get the job done in 2012?
At first glance, UPS looks as though it should be in terrific shape. The company announced two months ago that it expected holiday shipments to rise by 10% above 2011's record high, with an estimated 527 million holiday packages moving by UPS. That dwarfs rival FedEx's (NYSE: FDX  ) 280 million package holiday volume and reflects increased online shopping, which now represents about a tenth of overall holiday spending. Yet both companies cut earnings forecasts earlier this autumn, noting that economic uncertainties have held profits back and forced the companies to implement cost controls to bolster margins and offset high fuel costs.

Both UPS and FedEx have responded to the situation by instituting rate hikes. Effective Dec. 31, UPS will raise rates by an average of 4.5% to 4.9%. That puts a major crimp in major partner Amazon.com (NASDAQ: AMZN  ) , which primarily uses UPS for shipments to its retail customers, and could also affect Wal-Mart (NYSE: WMT  ) as it tries out same-day home shipping using UPS as a partner.

The big news for UPS has been the ongoing saga of its attempt to acquire Europe's TNT Express. That deal has met resistance from European Commission officials, but the companies have tried to address anti-competitive concerns and hope to complete their merger early next year.

UPS has strong potential to rebound in 2013, but it needs to make sure to profit enough from its high volume to boost its share price. Otherwise, making up falling margins by boosting volume is a losing strategy in the long run. 

What UPS' biggest customer wants
UPS relies in large part on online giant Amazon for its massive shipping volume. But will Amazon's dominance last? Find out the entire scoop in our premium report on the online retailer, which examines whether to buy or sell Amazon at its current pricey valuation. Our report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Click here to add UPS to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2168074, ~/Articles/ArticleHandler.aspx, 10/1/2014 12:32:46 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement