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from the world of economics and financeGiven its better prospects, we believe UPS stock (NYSE: UPS) is a better pick than its peer — FedEx stock (NYSE: FDX). UPS trades at a higher valuation multiple of 1.4x revenues vs. 0.7x for FedEx, due to its superior revenue growth, profitability, and financial position. There is more to the comparison, and in the sections below, we discuss why we believe UPS will offer better returns than FDX in the next three years. We compare a slew of factors, such as historical revenue growth, stock returns, and valuation, in an interactive dashboard analysis of FedEx vs. UPS: Which Stock Is A Better Bet? Parts of the analysis are summarized below.
Looking at stock returns, FDX stock has seen little change, moving slightly from levels of $260 in early January 2021 to around $255 now, while UPS stock has seen little change, moving slightly from levels of $170 to around $155 over the same period. This compares with an increase of about 35% for the S&P 500 over this roughly three-year period.
Overall, the performance of FDX and UPS stocks with respect to the index has been lackluster. Returns for FDX stock were 0% in 2021, -33% in 2022, and 46% in 2023, while the returns for UPS stock were 27% in 2021, -19% in 2022, and -10% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that FDX underperformed the S&P in 2021 and 2022, and UPS underperformed the S&P in 2023.
In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Industrials sector including GE, CAT, and UNP, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could UPS face a similar situation as it did in 2023, and underperform the S&P over the next 12 months — or will it see a strong jump? While we expect both FDX and UPS to see small gains, the latter will likely fare better between the two.
1. UPS’ Revenue Growth Is Slightly Better
2. UPS Is More Profitable
3. The Net of It All
While UPS may outperform FDX in the next three years, it is helpful to see how FedEx’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
Returns | Mar 2024 MTD [1] | 2024 YTD [1] | 2017-24 Total [2] |
FDX Return | 3% | 1% | 37% |
UPS Return | 4% | -2% | 34% |
S&P 500 Return | 1% | 8% | 130% |
Trefis Reinforced Value Portfolio | -2% | 3% | 630% |
[1] Returns as of 3/15/2024
[2] Cumulative total returns since the end of 2016
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.