What Today's UPS Downgrade Means for Mutual Fund Investors (UPS)

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What Today's UPS Downgrade Means for Mutual Fund Investors (UPS)

Shauna O'Brien Dec 15, 2014



Inside the Downgrade


Deutsche Bank made the following comments: “We have downgraded shares of UPS to Hold (from Buy) as we now see a more balanced risk/reward with the stock appreciating 9.5% since earnings (vs. a 2.6% increase in the S&P 500). The outperformance has been driven by multiple expansion (up 9.2% vs. the S&P 500 which has expanded 3.0%) as investors have looked out to DIM pricing tailwinds and a better peak season. We believe much of the good news is already in the shares with the stock trading at 19.4x our 2015 EPS estimate (vs. its one-year trailing average Consensus NTM P/E multiple of 18.3x). Accordingly, we have downgraded shares of UPS to Hold.”


Downgraded on Valuation


The company’s dividend yield is attractive at 2.41%, but it has under-performed compared to its faster growth competitor FedEx (FDX), which is up 22% YTD.


Mutual Funds to Watch



The Bottom Line


Shares of UPS are up 5% YTD.


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