Oftentimes in market trading, investors ignore the jockey and only see the horse – and that’s a big mistake.
“This has rarely been more applicable than when investing in shares of UPS (UPS),” Real Money Columnist Brad Ginesin wrote earlier this year. “The stock had languished for over seven years until Carole Tomé, the former CFO of Home Depot (HD), took over as CEO.”
In less than two years, Tomé transformed UPS into a far more efficient, consistent, and profitable company.
UPS' business has boomed during the pandemic, along with the surge in e-commerce sales.
But the stock suffered after reporting stellar results in early February.
“For many companies, the benefits of being in the right place at the right time, like Zoom (ZM) or Peloton (PTON), evaporated as the effects of the pandemic diminished,” Ginesin wrote. “For a time, Wall Street suspected UPS would have only a temporary tailwind as well. It's clear that under new leadership, with the focus on 'better, not bigger,' the improvements in UPS are lasting.”
Spring forward to this week, and UPS has again reported strong results, as noted by Real Money Columnist Stephen "Sarge" Guilfoyle. "The firm posted adjusted EPS of $3.05 on revenue of $24.4B. Both of these top and bottom lines comfortably beat Wall Street, while amounting to year over year earnings growth of 10.1% on revenue growth of 6.4%."
Guilfoyle is also a fan of Tomé. But he notes the advent of war in Europe and surging inflation are significant headwinds. "An economic slowdown is an economic slowdown. UPS, despite being a delivery services company heavily reliant upon commerce, does sell something quantifiable and does return capital to the stakeholders. In my view, even in this environment, UPS remains attractive. Fuel prices could change that, but not right now, not right here," Guilfoyle wrote.
