Why UPS Delivered a Decent 2012 to Investors
2012 is nearing its end, and now's a good opportunity to look at what happened throughout the year to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.
Today, I'll look at UPS . The delivery company is sensitive to overall global economic conditions, so as you'd expect, a slow-growth environment with worries about the sustainability of emerging-market strength helped hold the stock back this year. But as the economy seems to pick up, UPS' prospects may improve. Below, you'll find more on what moved shares of UPS this year.
Stats on UPS
Year-to-Date Stock Return
Revenue, past 12 months
Net Income, past 12 months
1-Year Revenue Growth
1-Year Net Income Growth
Source: S&P Capital IQ.
How did UPS get the job done in 2012?
At first glance, UPS looks as though it should be in terrific shape. The company announced two months ago that it expected holiday shipments to rise by 10% above 2011's record high, with an estimated 527 million holiday packages moving by UPS. That dwarfs rival FedEx's 280 million package holiday volume and reflects increased online shopping, which now represents about a tenth of overall holiday spending. Yet both companies cut earnings forecasts earlier this autumn, noting that economic uncertainties have held profits back and forced the companies to implement cost controls to bolster margins and offset high fuel costs.
Both UPS and FedEx have responded to the situation by instituting rate hikes. Effective Dec. 31, UPS will raise rates by an average of 4.5% to 4.9%. That puts a major crimp in major partner Amazon.com , which primarily uses UPS for shipments to its retail customers, and could also affect Wal-Mart as it tries out same-day home shipping using UPS as a partner.
The big news for UPS has been the ongoing saga of its attempt to acquire Europe's TNT Express. That deal has met resistance from European Commission officials, but the companies have tried to address anti-competitive concerns and hope to complete their merger early next year.
UPS has strong potential to rebound in 2013, but it needs to make sure to profit enough from its high volume to boost its share price. Otherwise, making up falling margins by boosting volume is a losing strategy in the long run.
UPS relies in large part on online giant Amazon for its massive shipping volume. But will Amazon's dominance last? Find out the entire scoop in our premium report on the online retailer, which examines whether to buy or sell Amazon at its current pricey valuation. Our report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.
Click here to add UPS to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
The article Why UPS Delivered a Decent 2012 to Investors originally appeared on Fool.com.Fool contributor Dan Caplinger has no positions in the stocks mentioned above. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Amazon.com. Motley Fool newsletter services recommend Amazon.com, FedEx, and United Parcel Service. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.