Shares of United Parcel Service (UPS, Financial) declined by 2.65% today following the disappointing quarterly performance and guidance cut by FedEx. Investors are concerned that the challenging market conditions impacting FedEx may also weigh on UPS in the near future.
Despite the recent dip, UPS is showing strong fundamentals. The company's stock is currently trading at $128.63, and its market capitalization stands at $110.18 billion. UPS boasts a Price-to-Earnings (P/E) ratio of 20.98 and an Altman Z-Score of 3.43, indicating strong financial health.
In terms of profitability, UPS's operating margin is expanding, standing at 8.24%. The company also has a robust dividend yield of 5.05%, which is close to its 10-year high. This makes UPS an attractive option for income-focused investors.
However, there are some warning signs. The Dividend Payout Ratio is alarmingly high at 90%, which raises concerns about the sustainability of its dividends. Additionally, revenue per share has been declining over the past 12 months.
On the positive side, UPS has several good signs, including a strong Beneish M-Score of -2.83, implying it is unlikely to be a manipulator. Additionally, its Price-to-Book (P/B) ratio of 6.47 is close to a 10-year low, and the stock's Price-to-Sales (P/S) ratio of 1.27 is near a 3-year low.
UPS is currently rated as "Modestly Undervalued" based on its GF Value of $165.02. This suggests that the stock has potential for growth and may be an attractive investment at its current price levels.
In summary, while the recent performance of FedEx has impacted investor sentiment around UPS, the latter's strong financial metrics and valuation suggest it remains a solid investment option, particularly for those looking for dividend income.
