- UPS posted more than a 20 percent gain in profits but its stock sank on concerns about its international business.
- UPS continues to offer the better dividend.
- FedEx is a stronger value buy and shows much better growth.
Parcel delivery company UPS (UPS) released its third-quarter earnings report before market open on Wednesday, Oct. 24, and posted an impressive gain of more than 20 percent in profits. However, declining international business, which the business attributed — at least partially — to the new tariffs, led to shares declining sharply, ending down 5.52 percent on the day.
Of course, these results warrant a closer look at both UPS and its main competitor, FedEx (FDX), as the importance of package delivery continues to skyrocket domestically with the growth of e-retail, but the looming trade war raises questions about international growth.
So, if you wanted to get a piece of that growing delivery industry, which company would make the smarter investment?
UPS vs. FedEx Stock Comparison
Here’s a basic comparison of UPS and FedEx:
|Market Cap||$92.9 billion||$55.1 billion|
|Most Recent Year Revenue*||$65.9 billion||$65.5 billion|
|Most Recent Year Profits*||$4.9 billion||$4.6 billion|
|Most Recent Year Revenue Growth*||8.15%||8.51%|
|Most Recent Year Profit Growth*||43.11%||52.55%|
|GOBankingRates’ Net Worth Evaluation||$53.9 billion||$64.4 billion|
|Stock Gain/Loss Last Month||-8.91%||-15.41%|
|Stock Gain/Loss Last Year||-6.96%||-6.28%|
Why You Might Pick UPS:
- UPS offers a much better dividend, with a yield of 3.15 percent to just 1.19 percent for FedEx.
- UPS is currently producing a better return on assets than FedEx at 10.94 percent to just 6.62 percent from FedEx.
- UPS is in a better cash situation, with $4.9 billion on hand and an operating cash flow of $6.1 billion where FedEx has $2.4 billion on hand and an operating cash flow of $4.8 billion.
Why You Might Pick FedEx:
- FedEx is the better value buy, with a P/E ratio of 11.81 and P/S ratio of 0.82 to levels of 18.14 and 1.35 for UPS.
- FedEx has the much stronger growth story, growing revenue each year for the past three fiscal years for a total of 37.93 percent while UPS has grown sales just 13.12 percent over the past three fiscal years.
- Combine those two and FedEx could be a good example of Peter Lynch’s famed “growth at a reasonable price,” with a PEG ratio of 0.97 to UPS’s 1.44.
The Final Word on UPS vs. FedEx
With remarkably similar profits and revenues in the most recent fiscal year, the real question here is whether you like the solid growth figures of FedEx more than the track record and solid dividend of UPS in the long run or vice versa.
Click through to read about more investment options such as ExxonMobil vs. Chevron.
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This article is produced for informational purposes only and is not a recommendation to buy or sell any securities. Investing comes with risk to loss of principal. Please always conduct your own research and consider your investment decisions carefully.
*The fiscal year for FedEx concludes at the end of May each year.