UPS Shares Hike – Time to Invest?

If you follow the markets, then you may have noticed that the end of July 2017 saw UPS shares experience a sudden hike after the company announced its results for the quarter. As you might expect from such a cause and effect, the results were not only good, they were significantly better than had been expected. Indeed, United Parcel Services, a worldwide giant in the logistics sector enjoyed a net income of $1.38 billion, which comes to $1.59 per share; this compares to figures for the previous end of the year of $1.27 billion and $1.53 per share. The FactSet consensus had established a predicted adjusted per-share earnings of $1.47 but the reality comfortably exceeded this, coming in at $1.58 per share. Revenue was $15.8 billion, up from $14.6 billion for the previous year. All of this is good news for those who already own UPS shares, but is it now a good time for others to invest in the company? Will these promising figures increase or are they are fluctuation or a short-term advantage that will dissipate in the face of events? Of course, it is always impossible to be absolutely certain at such times and no-one is in possession of absolute foresight or owns some kind of financial crystal ball! Absolute accuracy only comes with hindsight. However, we can rest assured that no matter how sophisticated or e-commerce based our tastes may become, people will still need parcel and other types of delivery services for the foreseeable future.

With the core of the service apparently assured, at least in so far as anything can be assured in this uncertain world, we might move on to note that the better than average expected figures were driven by strong domestic American e-commerce activity. Here again is the factor which we noted before. To put it simply the more we buy online the more logistics companies like UPS will be needed to move the purchased articles from warehouse to warehouse and ultimately to the address of the purchaser. Those of you who might be interested in investing in UPS shares should be reassured to hear that the company is committed to investing in its network, to expanding its reach and establishing its market presence. All of which is well and good but the question remains are this a good time to invest in UPS shares? Well, one further factor to bear in mind when you make your decision about whether or not to invest in this company. In spite of the strong performance shown in July 2017, the stock had declined by 2% in the year up to that date. It will be up to you to decide whether this represents a long-term decline in the fortunes of UPS which might dissuade you from investing or whether it suggests a stock available at an advantageous price which you would do well to pick up. The decision is yours.

(Simon Topliss, Research)

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