Wednesday January 02, 2013
by Ingrid Hendershot, editor Hendershot Investments
United Parcel Service (
UPS) is a leading global package delivery company that provides transportation, logistics, and financial services in the United States and internationally.
Year-to-date in 2012, UPS has generated free cash flow in excess of $3.6 billion. The company repurchased 18.5 million shares for approximately $1.4 billion at an average price of $75.68 per share and paid dividends totaling $1.6 billion, a 10% increase over the prior year.
The Big Brown dividend currently delivers a solid 3.1% yield. The company ended the third quarter of 2012 with $9 billion in cash and marketable securities, which will be used to fund the acquisition of TNT Express, which management expects to close in early 2013, along with debt repayment.
Capitalizing on the low interest rate environment, UPS issued $1.75 billion of debt during the quarter, which was oversubscribed more than seven-fold with an average interest rate of 2.4% and an average 13-year maturity.
UPS updated its full-year 2012 guidance to adjusted EPS in the range of $4.55-$4.65, which represents 5%-7% growth over 2011 adjusted results.
UPS expects to hit on all cylinders in the fourth quarter with operating margins expected to expand in all three business segments supported by daily volume growth of 3%.
Long-term investors should box up UPS, a high-quality market leader with strong cash flows and growing dividends.
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