Cramer Sees Bargain On United Parcel Service, Inc. (UPS) In The Long Run

In one of the latest revelations, Jim Cramer turned back to high quality merchandise, especially towards the common household companies such as United Parcel Service, Inc. (NYSE:UPS). United Parcel Service, Inc. (NYSE:UPS) is one of the primary targets in the merchandise industry, according to Cramer.

United Parcel Service, Inc. (NYSE:UPS) shares are trading $10 lower than their average price primarily because of the lowered guidance earnings of the company. According to the second quarter 2014 results released by United Parcel Service, Inc. (NYSE:UPS), the company lowered its adjusted EPS for this year to $4.90 to $5.00.

Investors might unwelcome this decision; however, it is a stronger step towards company’s foundation and it will offer the required push for excellent performance in future. Cramer also added that it might hurt the short-term EPS and dividends of United Parcel Service, Inc. (NYSE:UPS) but in a longer run, it makes an extraordinary amount of sense for development.


Scott Davis, Chairman and CEO of UPS, said in quarterly earnings, “The strong revenue growth this quarter is evidence that our portfolio resonates with customers, with more choosing UPS as their logistics provider. As we’ve said, 2014 is the year of investing for the customer. We are providing new capabilities and expanding capacity to ensure UPS meets the rapidly growing needs of the marketplace.”

Further, United Parcel Service, Inc. (NYSE:UPS) experienced shortage of goods in the last year’s Christmas Holiday season and the company would not like to be in a similar situation this year. In spite of the strong demand among consumers, the company’s shares are trading at 17 times its earnings against the historical average of 22 times.

UPS reported its second quarter earnings on 29 July 2014 with an impressive 7.2% improvement in its shipments primarily because of the E-Commerce demands. Further, the company witnessed an increase of 9.1% in its daily international shipments along with 7.4% increase in US domestic packages. The overall revenue was $14.26 billion for this quarter with EPS of $1.21 for the quarter. The company paid a major post-retirement liability amount leading to an after charge sum of $665 million.

This article has been written by Prakash Pandey.

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