United Parcel Services (UPS) is one of the biggest companies in the parcel delivery industry, where it competes with the likes of DHL and FedEx. It generates most of its revenue in the US domestic market, followed by its international and supply chain solutions.
Its business has been a bit volatile in the past few years as the world has moved from strong demand during the pandemic to weak one. Its annual revenue soared to over $100.3 billion in 2022 and then slipped to $90.9 billion in 2023.
UPS is also one of the top dividend companies in the US, with a yield of 4.85%. Its five-year compounded annual growth rate was 11.4%. It has increased its dividends for over 14 years, making it a potential future dividend aristocrat.
Its shares have not done well in the past few years as competition from the likes of Amazon and FedEx has risen. It has dropped by 36% from its highest point in 2021.
UPS stock was trading at $134, while its HypeIndex metric rose to 113%.
Positive hype
UPS hype has grown after the company published better-than-expected financial results on Oct. 24. Its revenue rose to $22.25 billion, better than estimates by $115 million.
It hopes to continue growing its business both organically and through acquisitions. The most recent buyout was Frigo-Trans, a company that offers healthcare logistics solutions, mostly in Europe.
Its profits continued rising, hitting $1.76 a share in the third quarter as the company continued its cost-cutting measures.
UPS’s operating profit jumped by 22.8% to $1.98 billion during the quarter.
The company also boosted its forward guidance as it now expects that its revenue will be $91.1 billion. It also expects that its operating margin will be 9.6%. The final numbers will likely be better than expected because the management tends to be conservative.
Analysts expect that its stock has some more upside, with the average estimate being $147.7, higher than the current $134.
UPS will likely benefit from low fuel prices as global crude oil prices fall. It will also receive a boost from the Fed, which has started to cut interest rates.
Negative hype
UPS remains in a deep bear market as its stock fell by over 30% from its highest level in 2021.
The stock has formed a death cross pattern as the 200-week and 50-week Exponential Moving Averages (EMA) crossed each other.
UPS revenue growth has stalled in the past few years as competition continued rising. For example, Amazon has done well, becoming one of the most popular players in the delivery space.
UPS is highly valued than FedEx, a company that is doing better. The forward price-to-earnings ratio stands at 18, higher than FedEx’s 14. Its price-to-book ratio is 6.8, much higher than FedEx’s 2.47.
UPS also has substantial debt. It has a net debt that has moved to over $20 billion.
UPS stock summary
The daily chart shows that the UPS share price jumped to $144.90 after its earnings on October 24. It then suffered a harsh reversal to $134.
The stock has moved below the 50-day moving average and the 23.6% Fibonacci Retracement point.
Therefore, the shares will likely remain under pressure in the coming months. If this happens, the next point to watch will be at $130. A move above the resistance point at $144.90 will point to more upside.
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HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.
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