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UPS Fails to Deliver

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  • Description

    Avondale Partners Managing Director Donald Broughton weighs in on UPS earnings.

  • Duration 3:35
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All right United Parcel Service shares -- down today UBS earnings were up 6%.

But short of forecasts and that's a problem Donald brought in this chief market strategist for having male partners Donald because -- reflect a global slowdown.

Now what reflects is -- come.

-- that has been -- market share.

C facts on the ground especially in the United States for over a decade.

And finally decided -- prices a weapon.

To quit ceding market share and to a lesser degree it is side of Europe we all know Europe is having some economic -- And when you look at the international franchise of UPS although they blamed Asia UPS is a very euros centric in -- And there that in their business international businessmen.

And Europe hurting right now that you've been tracking those market share losses to FedEx do you see anything in the new numbers out this morning that -- -- whether that's accelerating are slowing.

Well it.

It the -- market share loss in the domestic ground slowed.

But you know he had to realize that FedEx has been helpfully increasing price.

Their pricing this last quarter was up seven point 7% on the ground UPS -- was only up 2%.

And yet you know there's still taking market share so it's kind of kind of ominous sign when your.

To -- chief competitor is raising price faster than you and still stealing your market share.

Right now.

US shipments up four point 5% in the quarter.

Overseas shipments up only two point 8% can US grow enough to offset the weakness in Europe and a slowdown in Asia.

-- UPS has already basically said that they don't think it will buy it acquiring -- Indians express so they recently announced and over six billion dollar acquisition.

So they're not gonna get the growth organically.

Therefore they're gonna go by the growth OK now stock was at 65 bucks October it's near eighty right now you have -- hold on it.

-- -- -- -- -- -- It unless I hold -- -- would went wouldn't take -- make a -- Significantly lower valuation.

Or that they have proved that they were he had gotten through this TNT express.

Acquisition the problem with Citi you're gonna buy a company that has almost ten billion dollars in revenue that's not gonna happen.

Intergrations are gonna happen overnight or easily.

It's one of those basic.

Things that -- NBC company go through it again and again and again they talk about synergies.

In.

And other types of words audibly the synergy fairy exist.

I believe a lot of hard work and execution for years for a year from -- so we may see some benefits of the TNT express acquisition but in the short term.

It's likely to be a little bit messy.

OK now that -- -- -- dollar share and the washing the Wall Street expectation was a dollar to.

Here's the market overreacting.

No I don't think so I was at 98 cents.

So they're actually little bit better -- my expectations.

On the call management was very clear that although they maintain these its four dollars and 75 cents to five dollars a share in earnings guidance for the year.

That they thought.

The second quarter and third quarter had challenges and they listed those and they said this is definitely going to be a year which they delivered the earnings the fourth quarter well.

The market being the way it is right now is too -- if you -- report.

Less than expected earnings even slightly less than expected earnings and you -- guidance in the second and third quarter.

Then they're solid no way okay yes thank you very much you scandals like kind of part thanks for being what -- -- general.

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