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Transportation Stock #3: Con-Way Inc. (CNW)

United Postal Service (UPS) provides transportation, logistics, and financial services to clients in the U.S. and internationally. The company’s international packaging division provides delivery services to around 220 different countries. It has a huge fleet, with over 101,000 package carrying vehicles, 523 aircraft, and 35,000 containers used to transport cargo in its planes. In April, the company came in a little shy of analyst estimates for its first quarter, reporting earnings of $1.00 a share, slightly under the $1.02 that analysts expected. Before its disappointing Q1 report, the company had outpaced analyst estimates for eight straight quarters. Despite missing analyst estimates, its first quarter earnings were up 10% from the same period last year, and revenues rose to $13.1 billion, from $12.6 billion last year. The two main reasons for the missed earnings were lower than expected international sales, and a trend in the U.S. of consumers opting for lower priced shipping options. The company did reiterate its full year 2012 forecast, but its shares have been in a downward trend since the missed earnings report, and despite a strong move yesterday, UPS is still a risky bet until we can see some sustained momentum. Despite its recent downturn, the stock is still up 4.9% so far in 2012, about in-line with the S&P. We would hold off on this one until after its next earnings report next month and then re-evaluate the situation based on Q2 numbers. UPS has a nice annual dividend yield of 3.1%, and the stock gets a 4 STARs (out of 5) accumulate rating from S&P.

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.