WSJ: Why UPS Shares May Suffer Post-Holiday Blues
The Wall Street Journal says that as UPS approaches its busiest day of the year next Wednesday, the outlook for the company is anything but rosy:
UPS is grappling with stubbornly high overall costs, diminishing growth prospects in its U.S. package-delivery business, and acquisitions that have been slow to accelerate profit growth. At the same time, sky-high fuel prices and a freight-industry slump are pinching profits at major transportation providers, with few signs of a rebound before mid-2008.
The delivery giant has tightened its belt in anticipation that the current peak season will be the slowest since 2003. UPS trimmed its 2007 capital-spending plans by $200 million, or about 6%, put off vehicle purchases, and shifted some package volume to cheaper railroads. UPS’s 3.7% increase in third-quarter profit was its slimmest rise in nearly three years.
And investors are wary:
UPS shares have been lackluster since the 100-year-old company went public at $67.25 a share. Shares of rival FedEx Corp. have more than doubled in that span.