3 Numbers to Put UPS’s Profit in Perspective

3 Numbers to Put UPS’sProfit in Perspective

1. Net profit (duh)

For fiscal 2014, UPS’s net profit came in at $3.03 billionIn its annual report, UPS pointed to productivity drops, higher contract prices, additional union

overtime, and trainings hours as the main culprits behind its $94 million decline from 2013 to 2014.

UPS’s net profit has come out ahead of competitor FedEx Corporation

(NYSE: FDX) in recent years, but its dips have been especially deep

2. Operating profit

Net profit is the unequivocal bottom line, but operating profit allows us a

closer look at fundamentals unencumbered by debt payments, loan

interest, and awkward one-time payments.

The story looks similar here – a good sign there aren’t worryingly large non-operating expenses.

3. Profit per piece

UPS ships around 18 million packages every single day

Bigger isn’t always better, so it’s important to understand UPS’s

profit per piece.

UPS’s profit per piece has jumped around in recent years, but is essential to watch for as competitors fight to maintain margins while growing volume

2014 2013 2012

U.S. Profit Per Piece $0.48 0.74 0.14

Intl. Profit Per Piece $0.95 $1.46 $0.29

Total Average Profit Per Piece $0.55 $0.85 $0.16

But here’s the real bottom line:

Investors need to look out for net profit, but a company’s long-term success is more than that. Keep an eye on all three of these indicators

and you’ll be on your way to a more informed investing thesis.

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