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FedEx Stock Tops $60 Per Share

There was a lot of high-fiving in Memphis on Monday afternoon. For the first time since United Parcel Service went public in November 1999, FedEx's stock closed above Big Brown's. On March 4, FedEx stock closed at $61.22, while UPS's stock closed at $59.99 per share.

In the more than two years that UPS has been a publicly traded company, its stock consistently outperformed FedEx's, until Sept. 11. Since the events of Sept. 11, FedEx's stock has seen a more than 60 percent rise in value while UPS's stock is up in the high teens. FedEx's stock has been much more volatile than UPS's with a 52-week range, falling between $33 and $60 per share. FedEx's stock hasn't hit the $60 mark since mid-1999, before UPS's initial public offering.

Wall Street analysts have hit a comfort level with FedEx's strategic direction that wasn't there a few years ago. "We are finally seeing a strong degree of traction in the marketplace from the re-vamping of the national sales effort the company began about two years ago," said Gary Yablon, analyst with Credit Suisse First Boston said in a recent report. "A number of accounts that have not traditionally used FDX as their principal carrier are sounding more interested. We do not believe this is the function of any strike concerns but rather FDX simply selling the total product offering more efficiently."

UPS's stock has had a mild run up in price of its own over the last few weeks on the news that the economy is showing signs of improvement and its play to strengthen its supply chain management capabilities.

 

[upsadvisor]

Just to put it simply FED EX earnings going foward do not support a PE 32 and can not and should not trade at a premium to UPS with a PE of
28.

The numbers do not lie and sooner or later these stock will reuturn to the norm.

I am sure Mr. Yablon is well respected but I take issue with the statement that the stirke is not having any effect on either the price of UPS or FED Ex.

If your main competitor were to have a major labor dispute dont you think it would only serve to put more customers in your camp.

Let use a little common sense here.

Much like MR. Yablon this is only an opinion.

John

 

[upsadvisor]

donaldd,

Just for the record I work at one of the major financial services firms ( I dont want any one here to feel misled ).

There are several firms that are in the business of HYPO loans.

Bank Of America
Merrill Lynch
Wachovia
First Union

there is one other that I can not recall at the moment.

All of these offer loans based on LIBOR plus a spread and in most cases and annual fee based on the outstanding loan.

I can not speak of the service of any of these institutions save 2.

Based on the feed back I have received from my clients First Union was universally hated.

As I work for Merrill Lynch I can only vouch for my service and that of my team and UPS is my most important relationship and since everyone talks to everyone else I have found that if you do not deliver you are in trouble.

I would be more than happy to give you more details about all the banks that are in this field as well as their loan expenses.

I can tell you that on a pricing basis Bank of America offers some good terms that are comparabel to the terms Merrill Lynch offers
the other firms I feel have rates that are too high.

Good luck and happy hunting

John

 

[smallcapbuyer]

IMO, FDX, to some degree, is a house of cards that will be recognized in the near future by some analyst and at that point a downgrade, based on valuation, will be forthcoming. A prudent investor, looking at the facts objectively when deciding between FDX and UPS will have to come to the following realizations;

1. Debt and the differences between both companies
2. Credit rating
3. Growth rates. Trust me, someone is going to finally wake up to the fact that FDX's growth rates on ground are much higher than UPS' because their base of total packages is so much lower. Much like UPS' growth %'s in the early 90's on air were far greater than FDX's, the same was true, our base was much lower.
4. PE ratios. With more debt, a MUCH lower credit rating and growth #'s somewhat misleading (particularly since it's on lower revenue business) the prudent investor has to ask the question, "with these facts, why would I pay more for FDX (from a PE perspective) than UPS. If I were a player in the market (which I'm not), I predict FDX could be an excellent candidate for a short position right about now. JMHO.

 

[jcroche]

By smallcapbuyer on Thursday, March 07, 2002 - 10:38 am:

"...If I were a player in the market (which I'm not), I predict FDX could be an excellent candidate for a short position right about
now. JMHO."

smallcapbuyer:

I have to disagree with you. Too much uncertainty regarding the UPS / IBT contract at this time. Wait a while. FDX "might" continue an upward trend
as long as no positive news about negotiations are forthcoming. Keep an eye on the news regarding negotations - wait for the first positive signs and then "go short"! I think you are currently seeing some profit taking which accounts for today's selloff.

BTW - I bailed @ 50 - made $$$$ :>),
but never expected this. :>(
I don't short - BLSH strategy.

jcr

 

[upsadvisor]

If you were looking at the overnight delivery sector you have to decide where do I put my money ?

Lets look at the players
UPS
Fed Ex
Airborne Freight
DHL

UPS has some short term risk due to the upcoming contract
Airborne is an also ran
DHL foreign company and not a major player ground delivery in the US
so who's left ?

Fed Ex makes the most sense in the short run but the stock is way ahead of itself, I would rather own UPS as it has much more upside based just on the margins, earnings and PE.

Fed is getting the attention because of the contract risk. Make no mistake about it, the market moves on future earnings growth and emotion.

Remove the contract issue ( emotion ) and you are left with the earnings story.

I think I have beat this horse to death.

John

 

[moreluck]

It's nice to see a "break" through that $60 ceiling!!

 

[jcroche]

upsadvisor:

I totally agree with your synopsis, but try to put it in simple terms:

Are you an "investor"?
Are you a "trader"?

Long-term (investor) = UPS
Short-term (trader) = FDX

jcr

 

[my2cents]

Their business sense is about power and control. Does anyone think they care about customers and shareowners?

 

[gsx1990]

I had seen some messages on the MF board about
UPS stock conversion, and I wanted to add my
experiences here. I have in the past 6 months,
swapped 100% of my A shares over to B shares.
I filled out the paper work with First union, sent
them the requests via USPS. In about 7-10
business days, I received back via UPS second day
air, my UPS certificate. I then turned around
and sent DATEK (my online broker) the certificate via UPS SDA. My UPS shares were credited to my DATEK account by the end of the day on which
they were received. Overall, I had no problems
with First Union, although I didn't have to talk
to them personally. I also was very pleased with DATEK, and the speed at which they credited my
account. This morning, I received my dividends in my DATEK account just like clockwork. DATEK charges NO fees to keep the account (I think you might need a $5,000 min or a certain amount of trades a qtr to keep this). Trades via DATEK are only $9.99 for up to 5000 shares, so I can liquidate my UPS shares at any time for a very minimal fee. Overall, I feel
much more secure keeping my shares in my control,
and not the control of First Union. Also, I do
NOT get any 2.5% bonus for keeping shares as "A"
shares, so no incentive there to keep as "A". Finally, I figure the more "B" shares there are, the better the changes of UPS being admitted to the S&P 500. The voting rights for me were not
a consideration. Hope the above helped anyone
considering moving from A to B shares.

gsx1990

 

[stomlinson]

I still do not understand WHY people think the price of an individual share, seperated from the market capitalization of the underlying company, is important.


>>>There was a lot of high-fiving in Memphis on Monday afternoon. For the first time since United Parcel Service went public in November 1999, FedEx's stock closed above Big Brown's. On March 4, FedEx stock closed at $61.22, while UPS's stock closed at $59.99 per share.<<<

 

[longups]

I wonder if there is any reason to keep shares as "A" shares. Is there possibly a plan in the future to do something with them other then voting rights???
Such as different dividends (preferred stock), or possibly going private again? (I guess I'm paranoid)
I would like to trade more covered calls with "B" shares but always thing that changing from "A" shares is a bad thing!
Any Thoughts?

 

[gsx1990]

longups,
The only advantage of owning "A" shares besides
the voting rights that I know of is the 2.5%
bonus that UPS managers get for owning "A" shares.
This can definately be a substantial bonus if
you own alot of shares. If I were a manager at
UPS, I'm pretty sure I would keep my shares as
"A" shares. Otherwise, I don't think there are
any advantages.

gsx90

 

[bugss]

News Coverage on discrimination and harrasment at UPS. If you are a present or past employee of UPS and had problems, I would like to know about it. Your identiy will not be know. We all have to stick together and we CAN make a difference. Also, the contract is being mediated and all the loopholes can be closed.

 

[goatmonster]

Methinks you got lost on the way to teamster.net, buggs. This really isnt the type of board for a Union Rally.

 

[thedrooler]

Thilly wabbit!

 

[thedrooler]

The 2.5% "additional incentive bonus" for management people is capped at the person's monthly salary. It will not exceed that level no matter how much stock the person owns.

Drooler

 

[michael]

Drooler ..

You are absolutely correct it is capped at that. In my opinion it's just an emotional thing to keep the "A" shares. If I was in management there now I would think about converting, but other than that I see no reason not to.

By the way, what are you doing up so early on a Sat. morning?

Michael

 

[longups]

Since I'm retired (for a full 2 weeks now) and the transfer agent moving to Mellon hence 2 weeks of involuntary lockup I guess its prudent to move more shares over to "B".
Thanks for the replies.

 

[bugss]

Why is there over 400 court cases against UPS if something is not happening there?