United Parcel Service
Third-quarter net earnings at UPS increased 20.4% to $890 million, or $0.78 per diluted share, while total sales lifted by 7.7%. Adjusted to reflect some one-time gains, earnings were $0.70 per diluted share, which missed analysts' estimates by $0.02.
Total worldwide average daily volume increased 3.4% to 13.7 million, while international export package volume grew 13.2% and international package revenue grew 22%.
UPS earnings weren't as flashy as the first-quarter numbers archrival FedEx
Today, UPS talked up its strength in overseas markets, a metric many investors are watching in regard to worldwide economic strength as well as strength of the delivery companies. Of particular attention was the company's success in Asia, with export volume increasing 29% and volume out of China more than doubling (however, FedEx's last quarterly report showed similar success in that market).
One factor investors need to be wary of is the high price for fuel, which of course affects the delivery firms. After all, high fuel prices have a way of putting a damper on economic growth, which is essential for both UPS and FedEx to grow their businesses. (Whether for economic reasons or good PR, it's probably not coincidental that FedEx recently announced its plans to build a solar-power system at its California hub and to integrate more gasoline-electric hybrid vehicles into its fleet.)
Meanwhile, both companies face a hungry underdog competitor, DHL, which has been aggressively advertising its services.
UPS is currently trading at a forward P/E of 26, which, given growth projections, the competitive and economic climate, and comparisons to a rival like FedEx, may sound like a pricey entry point for many investors.
Alyce Lomax does not own shares of any of the companies mentioned.