We believe FedEx stock (NYSE: FDX) is currently a better pick over its peer UPS stock (NYSE: UPS), given its comparatively lower valuation of 0.5x trailing revenues than 1.4x for UPS. Although this gap in the valuation is largely justified given UPS’ superior profitability and lower financial risk, as discussed below, this valuation gap will likely narrow in favor of FedEx
FDX
If we look at stock returns, UPS, with -13% returns in the last twelve months, has fared better than FedEx, down 26%, and the broader S&P 500 index, down 14%. The logistics stocks have been weighed down due to rising costs. The giant e-commerce surge seen through the lockdown phase of the Covid-19 pandemic is now cooling off, reflected in the delivery volumes and stock prices for e-commerce-related companies.
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