How UPS is Adjusting to the Ecommerce Economy

Investors in package delivery companies United Parcel Service and FedEx Corporation are likely pleased with 2016 so far. In a year when global growth has disappointed, both stocks have outperformed the S&P 500, partially because of both are taking advantage of positive trends in e-commerce growth and the ongoing strength of the consumer.

UPS, in particular, has been firing on all cylinders as of late. With this in mind, let's take a look at UPS's recent earnings call and five ways management is adjusting to circumstances

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United Parcel Service Conference Call

As United Parcel Service moves into its critical fourth-quarter, it's a good time for investors to take stock on what kind of year it's been and how UPS shaping up for the future. In the near-term, the company's focus is on dealing with peak demand during the holiday period, and the likely impact of slower economic growth. Thinking longer term, the question is how will it affect UPS's business and its earnings expectations? Here are five things management had to say on such issues during the recent third-quarter earnings call.


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United Parcel Service Earnings Analysis

On a headline basis, United Parcel Service delivered a solid set of results and guidance on Tuesday, but many of the underlying themes in the report confirmed what key rival FedEx Corporation said about the weakening in the global economy in 2015. Let's take a look at the headline numbers and then focus on the trends beneath them.


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United Parcel Service Earnings Analysis

Despite some disappointing developments in the last three months, United Parcel Service (NYSE:UPS) managed to beat earnings estimates with its second-quarter results. Moreover, management pleased investors when it expressed confidence in hitting the upper end of the company's full-year guidance range. The stock is up more than 5% as of this writing. Let's take a look at how the package delivery company managed to do this.


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United Parcel Service, Inc (UPS) Stock or FedEx Corporation (FDX) Stock?

Should you buy United Parcel Service (NYSE:UPS) or FedEx (NYSE:FDX)? It's one of the most common investment questions, but also one that doesn't need to be answered -- you can always buy neither or both. However, if you forced me to make a decision on one or the other, I would say UPS looks like a better value right now; here's why.


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The Bullish Case for United Parcel Service (UPS)

After United Parcel Service  (NYSE: UPS  )  missed earnings estimates for two consecutive fourth quarters, investors would be entitled to feel a bit concerned about the company's direction. It's fair to say UPS' execution has not been what investors have hoped for, but that doesn't mean the stock isn't worth buying. On the contrary, there are many reasons to feel positive about the stock, and the recent dip could prove an excellent entry point. Let's look at the three key bullish arguments behind buying the stock.


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United Parcel Service (UPS) Management Wants You to Know...

Most investors in United Parcel Service (NYSE: UPS  )  already know about the company's difficulties in dealing with peak demand in the fourth quarter. UPS has now disappointed investors with holiday season operations for two consecutive years. In 2013, the company found itself with insufficient capacity to meet peak demand, then in 2014 it overcompensated and built out too much. This is clearly the issue analysts and investors are focusing on, so let's look at what management wants you to know about it.




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What Went Wrong With United Parcel Service (UPS) Stock?

United Parcel Service (NYSE: UPS  ) investors already knew that the company's fourth-quarter earnings would fall short of previous expectations for EPS of $1.47-- the company gave preliminary figures on Jan. 23. At that time, management shocked the market by predicting its adjusted diluted EPS for the fourth quarter would come in at $1.25. The figure duly came in as expected with the release of its results today.



With that said, investors will be wondering just how UPS managed to disappoint for the second holiday season in a row. In addition, what is the company doing to address its issues?


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The Bearish Case for United Parcel Service, Inc

United Parcel Service's (NYSE: UPS  ) latest results indicated a return to form for the company. We've already covered the bullish case for the stock with the five key things management hopes will turn the stock around; now let's examine the bearish case.

Source: United Parcel Service.

All about e-commerce for United Parcel Service

 I should admit that I'm bullish on the stock, without believing it's a screamingly good value. But every stock comes with some risk, and in the case of UPS and rival FedEx (NYSE: FDX  ) , the key risks comes from the same place as their biggest opportunity -- the burgeoning growth in business-to-consumer, or B2C, e-commerce.


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