If you're a UPS
Revenues were up 16.5% to $11.5 billion, and net income increased 10.5% to $975 million. Growth in earnings per share was a bit higher at 14.1% because of the company's ongoing share repurchases. A similar growth is expected in the second quarter, and full-year guidance was reaffirmed.
UPS is not a cheap stock and probably never will be because of the huge amounts of free cash flow it consistently produces -- $1.9 billion in the first quarter alone. But with the P/E for the trailing 12 months now at 22.9, it is at the low end of its historical range of 19 to 30. I don't advocate purchasing any stock based simply on a P/E range, but it is a useful metric to quickly decide whether a company is worth investigating further.
The investment opportunity is made all the more attractive with UPS' exposure to many burgeoning foreign economies, such as those in China and India. The company continues to add flights to and from China and undertake other operational expansions there. Meanwhile, a business restructuring and the implementation of new package flow technology are expected to widen margins, while capital expenditures will begin to decrease.
Competition is heavy in this space, but the global economy is large enough to allow many entities to prosper. You can see it for yourself by looking at the five-year chart of just about every competitor UPS has, including FedEx
FedEx is a Motley Fool Stock Advisor recommendation. For more of Tom and David Gardner's selection, check out Stock Advisor free for 30 days.
As a NASCAR fan, Fool contributor John Bluis still wants to see Dale Jarrett -- who sits behind the wheel of the UPS No. 88 car -- drive the truck. John doesn't drive his portfolio's returns with any of the stocks mentioned in this article (which means he doesn't own any shares, long or short). The Fool is investors writing for investors.
