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Critical Review: FedEx Corporation (FDX) vs. United Parcel Service (NYSE:UPS)
FedEx Corporation (NYSE: FDX) and United Parcel Service (NYSE:UPS) are both large-cap transportation companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, profitabiliy, dividends, analyst recommendations, risk, valuation and institutional ownership.
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Earnings & Valuation
This table compares FedEx Corporation and United Parcel Service’s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| FedEx Corporation | $60.32 billion | 0.95 | $8.01 billion | $11.06 | 19.08 |
| United Parcel Service | $61.80 billion | 1.57 | $7.66 billion | $3.92 | 28.53 |
FedEx Corporation has higher revenue, but lower earnings than United Parcel Service. FedEx Corporation is trading at a lower price-to-earnings ratio than United Parcel Service, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares FedEx Corporation and United Parcel Service’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| FedEx Corporation | 4.97% | 22.19% | 7.10% |
| United Parcel Service | 5.60% | 320.39% | 13.20% |
Risk and Volatility
FedEx Corporation has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500. Comparatively, United Parcel Service has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of current ratings and recommmendations for FedEx Corporation and United Parcel Service, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| FedEx Corporation | 0 | 4 | 19 | 0 | 2.83 |
| United Parcel Service | 1 | 9 | 5 | 0 | 2.27 |
FedEx Corporation currently has a consensus target price of $221.88, indicating a potential upside of 5.14%. United Parcel Service has a consensus target price of $114.31, indicating a potential upside of 2.22%. Given FedEx Corporation’s stronger consensus rating and higher possible upside, equities analysts clearly believe FedEx Corporation is more favorable than United Parcel Service.
Insider & Institutional Ownership
76.4% of FedEx Corporation shares are owned by institutional investors. Comparatively, 53.3% of United Parcel Service shares are owned by institutional investors. 8.7% of FedEx Corporation shares are owned by company insiders. Comparatively, 0.6% of United Parcel Service shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Dividends
FedEx Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 0.9%. United Parcel Service pays an annual dividend of $3.32 per share and has a dividend yield of 3.0%. FedEx Corporation pays out 18.1% of its earnings in the form of a dividend. United Parcel Service pays out 84.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FedEx Corporation has raised its dividend for 7 consecutive years and United Parcel Service has raised its dividend for 7 consecutive years.
Summary
FedEx Corporation beats United Parcel Service on 9 of the 16 factors compared between the two stocks.
About FedEx Corporation
About United Parcel Service