by Ingrid Hendershot, editor Hendershot Investments
United Parcel Service
is a leading global package delivery company that provides
transportation, logistics, and financial services in the United States
Year-to-date in 2012, UPS has generated
free cash flow in excess of $3.6 billion. The company repurchased 18.5
million shares for approximately $1.4 billion at an average price of
$75.68 per share and paid dividends totaling $1.6 billion, a 10%
increase over the prior year.
The Big Brown dividend currently delivers a solid 3.1% yield. The
company ended the third quarter of 2012 with $9 billion in cash and
marketable securities, which will be used to fund the acquisition of TNT
Express, which management expects to close in early 2013, along with
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the low interest rate environment, UPS issued $1.75 billion of debt
during the quarter, which was oversubscribed more than seven-fold with
an average interest rate of 2.4% and an average 13-year maturity.
updated its full-year 2012 guidance to adjusted EPS in the range of
$4.55-$4.65, which represents 5%-7% growth over 2011 adjusted results.
expects to hit on all cylinders in the fourth quarter with operating
margins expected to expand in all three business segments supported by
daily volume growth of 3%.
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Long-term investors should box up UPS, a HI-quality market leader with strong cash flows and growing dividends.