Intrinsic value of United Parcel Service Cl B - UPS

Previous Close

$118.98

  Intrinsic Value

$83.03

stock screener

  Rating & Target

sell

-30%

Previous close

$118.98

 
Intrinsic value

$83.03

 
Up/down potential

-30%

 
Rating

sell

We calculate the intrinsic value of UPS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 102.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
Revenue, $m
  71,274
  76,890
  82,727
  88,794
  95,097
  101,649
  108,460
  115,543
  122,912
  130,582
  138,568
  146,888
  155,560
  164,603
  174,038
  183,886
  194,171
  204,916
  216,146
  227,888
  240,169
  253,018
  266,466
  280,545
  295,289
  310,731
  326,910
  343,864
  361,633
  380,260
Variable operating expenses, $m
  41,647
  44,883
  48,246
  51,741
  55,373
  59,148
  63,072
  67,153
  71,398
  75,817
  79,834
  84,628
  89,624
  94,834
  100,270
  105,944
  111,870
  118,060
  124,530
  131,295
  138,371
  145,774
  153,522
  161,633
  170,128
  179,025
  188,346
  198,114
  208,352
  219,083
Fixed operating expenses, $m
  20,688
  21,143
  21,609
  22,084
  22,570
  23,066
  23,574
  24,093
  24,623
  25,164
  25,718
  26,284
  26,862
  27,453
  28,057
  28,674
  29,305
  29,950
  30,608
  31,282
  31,970
  32,673
  33,392
  34,127
  34,878
  35,645
  36,429
  37,231
  38,050
  38,887
Total operating expenses, $m
  62,335
  66,026
  69,855
  73,825
  77,943
  82,214
  86,646
  91,246
  96,021
  100,981
  105,552
  110,912
  116,486
  122,287
  128,327
  134,618
  141,175
  148,010
  155,138
  162,577
  170,341
  178,447
  186,914
  195,760
  205,006
  214,670
  224,775
  235,345
  246,402
  257,970
Operating income, $m
  8,938
  10,863
  12,873
  14,968
  17,154
  19,435
  21,815
  24,298
  26,891
  29,600
  33,015
  35,976
  39,074
  42,316
  45,711
  49,268
  52,996
  56,906
  61,007
  65,310
  69,828
  74,571
  79,552
  84,785
  90,283
  96,062
  102,135
  108,520
  115,232
  122,290
EBITDA, $m
  12,351
  14,500
  16,740
  19,077
  21,513
  24,054
  26,704
  29,469
  32,355
  35,368
  38,517
  41,808
  45,249
  48,850
  52,620
  56,568
  60,705
  65,041
  69,588
  74,358
  79,362
  84,615
  90,131
  95,923
  102,006
  108,398
  115,113
  122,171
  129,589
  137,386
Interest expense (income), $m
  373
  1,312
  1,301
  1,489
  1,685
  1,888
  2,099
  2,318
  2,547
  2,784
  3,031
  3,288
  3,555
  3,834
  4,124
  4,427
  4,743
  5,073
  5,417
  5,777
  6,153
  6,547
  6,958
  7,388
  7,839
  8,310
  8,804
  9,322
  9,863
  10,431
  11,026
Earnings before tax, $m
  7,626
  9,562
  11,383
  13,284
  15,267
  17,336
  19,496
  21,751
  24,108
  26,570
  29,728
  32,421
  35,240
  38,191
  41,284
  44,525
  47,923
  51,489
  55,230
  59,157
  63,281
  67,613
  72,164
  76,946
  81,973
  87,257
  92,813
  98,656
  104,801
  111,264
Tax expense, $m
  2,059
  2,582
  3,073
  3,587
  4,122
  4,681
  5,264
  5,873
  6,509
  7,174
  8,027
  8,754
  9,515
  10,312
  11,147
  12,022
  12,939
  13,902
  14,912
  15,972
  17,086
  18,255
  19,484
  20,775
  22,133
  23,559
  25,060
  26,637
  28,296
  30,041
Net income, $m
  5,567
  6,980
  8,310
  9,697
  11,145
  12,655
  14,232
  15,879
  17,598
  19,396
  21,701
  23,667
  25,725
  27,880
  30,137
  32,503
  34,984
  37,587
  40,318
  43,185
  46,195
  49,357
  52,679
  56,171
  59,840
  63,698
  67,754
  72,019
  76,505
  81,222

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  49,120
  52,991
  57,014
  61,195
  65,539
  70,055
  74,749
  79,630
  84,709
  89,994
  95,498
  101,232
  107,208
  113,441
  119,943
  126,731
  133,819
  141,224
  148,963
  157,056
  165,519
  174,375
  183,643
  193,346
  203,507
  214,150
  225,300
  236,984
  249,230
  262,068
Adjusted assets (=assets-cash), $m
  49,120
  52,991
  57,014
  61,195
  65,539
  70,055
  74,749
  79,630
  84,709
  89,994
  95,498
  101,232
  107,208
  113,441
  119,943
  126,731
  133,819
  141,224
  148,963
  157,056
  165,519
  174,375
  183,643
  193,346
  203,507
  214,150
  225,300
  236,984
  249,230
  262,068
Revenue / Adjusted assets
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
  1.451
Average production assets, $m
  28,296
  30,525
  32,843
  35,251
  37,754
  40,355
  43,059
  45,871
  48,796
  51,841
  55,011
  58,314
  61,757
  65,347
  69,093
  73,003
  77,086
  81,352
  85,810
  90,471
  95,347
  100,448
  105,787
  111,376
  117,230
  123,360
  129,783
  136,514
  143,568
  150,963
Working capital, $m
  -4,205
  -4,537
  -4,881
  -5,239
  -5,611
  -5,997
  -6,399
  -6,817
  -7,252
  -7,704
  -8,175
  -8,666
  -9,178
  -9,712
  -10,268
  -10,849
  -11,456
  -12,090
  -12,753
  -13,445
  -14,170
  -14,928
  -15,722
  -16,552
  -17,422
  -18,333
  -19,288
  -20,288
  -21,336
  -22,435
Total debt, $m
  24,094
  27,578
  31,199
  34,961
  38,871
  42,935
  47,160
  51,553
  56,124
  60,881
  65,834
  70,995
  76,374
  81,983
  87,835
  93,944
  100,323
  106,988
  113,953
  121,236
  128,853
  136,823
  145,165
  153,898
  163,042
  172,621
  182,656
  193,172
  204,193
  215,747
Total liabilities, $m
  44,208
  47,692
  51,313
  55,075
  58,985
  63,049
  67,274
  71,667
  76,238
  80,995
  85,948
  91,109
  96,488
  102,097
  107,949
  114,058
  120,437
  127,102
  134,067
  141,350
  148,967
  156,937
  165,279
  174,012
  183,156
  192,735
  202,770
  213,286
  224,307
  235,861
Total equity, $m
  4,912
  5,299
  5,701
  6,119
  6,554
  7,005
  7,475
  7,963
  8,471
  8,999
  9,550
  10,123
  10,721
  11,344
  11,994
  12,673
  13,382
  14,122
  14,896
  15,706
  16,552
  17,437
  18,364
  19,335
  20,351
  21,415
  22,530
  23,698
  24,923
  26,207
Total liabilities and equity, $m
  49,120
  52,991
  57,014
  61,194
  65,539
  70,054
  74,749
  79,630
  84,709
  89,994
  95,498
  101,232
  107,209
  113,441
  119,943
  126,731
  133,819
  141,224
  148,963
  157,056
  165,519
  174,374
  183,643
  193,347
  203,507
  214,150
  225,300
  236,984
  249,230
  262,068
Debt-to-equity ratio
  4.910
  5.200
  5.470
  5.710
  5.930
  6.130
  6.310
  6.470
  6.630
  6.760
  6.890
  7.010
  7.120
  7.230
  7.320
  7.410
  7.500
  7.580
  7.650
  7.720
  7.780
  7.850
  7.900
  7.960
  8.010
  8.060
  8.110
  8.150
  8.190
  8.230
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,567
  6,980
  8,310
  9,697
  11,145
  12,655
  14,232
  15,879
  17,598
  19,396
  21,701
  23,667
  25,725
  27,880
  30,137
  32,503
  34,984
  37,587
  40,318
  43,185
  46,195
  49,357
  52,679
  56,171
  59,840
  63,698
  67,754
  72,019
  76,505
  81,222
Depreciation, amort., depletion, $m
  3,413
  3,636
  3,868
  4,109
  4,359
  4,619
  4,889
  5,171
  5,463
  5,768
  5,501
  5,831
  6,176
  6,535
  6,909
  7,300
  7,709
  8,135
  8,581
  9,047
  9,535
  10,045
  10,579
  11,138
  11,723
  12,336
  12,978
  13,651
  14,357
  15,096
Funds from operations, $m
  8,980
  10,617
  12,178
  13,806
  15,504
  17,274
  19,122
  21,049
  23,062
  25,164
  27,202
  29,499
  31,901
  34,414
  37,046
  39,803
  42,693
  45,722
  48,899
  52,232
  55,730
  59,402
  63,258
  67,308
  71,563
  76,034
  80,732
  85,670
  90,861
  96,319
Change in working capital, $m
  -319
  -331
  -344
  -358
  -372
  -387
  -402
  -418
  -435
  -452
  -471
  -491
  -512
  -534
  -557
  -581
  -607
  -634
  -663
  -693
  -725
  -758
  -793
  -831
  -870
  -911
  -955
  -1,000
  -1,048
  -1,099
Cash from operations, $m
  9,299
  10,948
  12,522
  14,164
  15,876
  17,661
  19,523
  21,467
  23,496
  25,616
  27,674
  29,990
  32,412
  34,948
  37,603
  40,385
  43,300
  46,356
  49,561
  52,925
  56,454
  60,160
  64,052
  68,139
  72,433
  76,945
  81,687
  86,671
  91,910
  97,418
Maintenance CAPEX, $m
  -2,613
  -2,830
  -3,053
  -3,284
  -3,525
  -3,775
  -4,035
  -4,306
  -4,587
  -4,880
  -5,184
  -5,501
  -5,831
  -6,176
  -6,535
  -6,909
  -7,300
  -7,709
  -8,135
  -8,581
  -9,047
  -9,535
  -10,045
  -10,579
  -11,138
  -11,723
  -12,336
  -12,978
  -13,651
  -14,357
New CAPEX, $m
  -2,161
  -2,230
  -2,317
  -2,408
  -2,503
  -2,601
  -2,704
  -2,812
  -2,925
  -3,045
  -3,170
  -3,303
  -3,443
  -3,590
  -3,746
  -3,910
  -4,083
  -4,266
  -4,458
  -4,661
  -4,876
  -5,101
  -5,339
  -5,589
  -5,853
  -6,131
  -6,423
  -6,731
  -7,054
  -7,395
Cash from investing activities, $m
  -4,774
  -5,060
  -5,370
  -5,692
  -6,028
  -6,376
  -6,739
  -7,118
  -7,512
  -7,925
  -8,354
  -8,804
  -9,274
  -9,766
  -10,281
  -10,819
  -11,383
  -11,975
  -12,593
  -13,242
  -13,923
  -14,636
  -15,384
  -16,168
  -16,991
  -17,854
  -18,759
  -19,709
  -20,705
  -21,752
Free cash flow, $m
  4,525
  5,889
  7,152
  8,471
  9,848
  11,284
  12,784
  14,349
  15,984
  17,692
  19,319
  21,186
  23,138
  25,182
  27,323
  29,565
  31,916
  34,381
  36,968
  39,682
  42,532
  45,524
  48,668
  51,971
  55,442
  59,091
  62,928
  66,962
  71,204
  75,666
Issuance/(repayment) of debt, $m
  -195
  3,484
  3,621
  3,763
  3,910
  4,064
  4,225
  4,393
  4,571
  4,757
  4,953
  5,161
  5,379
  5,609
  5,852
  6,109
  6,379
  6,665
  6,966
  7,283
  7,617
  7,970
  8,341
  8,733
  9,145
  9,579
  10,035
  10,516
  11,021
  11,553
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -195
  3,484
  3,621
  3,763
  3,910
  4,064
  4,225
  4,393
  4,571
  4,757
  4,953
  5,161
  5,379
  5,609
  5,852
  6,109
  6,379
  6,665
  6,966
  7,283
  7,617
  7,970
  8,341
  8,733
  9,145
  9,579
  10,035
  10,516
  11,021
  11,553
Total cash flow (excl. dividends), $m
  4,330
  9,372
  10,773
  12,234
  13,758
  15,348
  17,009
  18,743
  20,555
  22,449
  24,273
  26,346
  28,517
  30,791
  33,175
  35,674
  38,295
  41,046
  43,933
  46,965
  50,149
  53,494
  57,009
  60,704
  64,587
  68,670
  72,963
  77,477
  82,226
  87,220
Retained Cash Flow (-), $m
  -3,912
  -387
  -402
  -418
  -434
  -452
  -469
  -488
  -508
  -529
  -550
  -573
  -598
  -623
  -650
  -679
  -709
  -741
  -774
  -809
  -846
  -886
  -927
  -970
  -1,016
  -1,064
  -1,115
  -1,168
  -1,225
  -1,284
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  593
  641
  692
  745
  799
  856
  915
  976
  1,040
  1,106
  1,175
  1,247
  1,322
  1,400
  1,481
  1,566
  1,655
  1,748
  1,844
  1,945
  2,051
  2,162
  2,277
  2,398
  2,525
  2,658
  2,797
  2,942
  3,095
  3,255
Cash available for distribution, $m
  418
  8,985
  10,371
  11,816
  13,323
  14,897
  16,539
  18,254
  20,047
  21,920
  23,722
  25,773
  27,919
  30,168
  32,525
  34,995
  37,587
  40,306
  43,159
  46,156
  49,303
  52,609
  56,082
  59,733
  63,571
  67,605
  71,848
  76,309
  81,001
  85,936
Discount rate, %
  11.60
  12.18
  12.79
  13.43
  14.10
  14.80
  15.55
  16.32
  17.14
  18.00
  18.90
  19.84
  20.83
  21.87
  22.97
  24.12
  25.32
  26.59
  27.92
  29.31
  30.78
  32.32
  33.93
  35.63
  37.41
  39.28
  41.25
  43.31
  45.47
  47.75
PV of cash for distribution, $m
  374
  7,140
  7,228
  7,138
  6,890
  6,506
  6,015
  5,446
  4,828
  4,190
  3,535
  2,937
  2,385
  1,892
  1,463
  1,104
  810
  579
  401
  270
  176
  111
  68
  40
  23
  12
  6
  3
  2
  1
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

United Parcel Service, Inc. (UPS) is a package delivery company. The Company is a provider of global supply chain management solutions. The Company operates through three segments: U.S. Domestic Package operations, International Package operations, and Supply Chain & Freight operations. As of December 31, 2016, the Company delivered packages in over 220 countries and territories. The Company offers a spectrum of the United States domestic guaranteed ground and air package transportation services. The International Package segment includes the small package operations in Europe, Asia-Pacific, Canada and Latin America, the Indian sub-continent, the Middle East and Africa. The Supply Chain & Freight segment includes its forwarding and logistics services, truckload freight brokerage, UPS Freight and its financial offerings through UPS Capital. The Company serves the global market for logistics services, which include transportation, distribution, contract logistics and ground freight.

FINANCIAL RATIOS  of  United Parcel Service Cl B (UPS)

Valuation Ratios
P/E Ratio 30.1
Price to Sales 1.7
Price to Book 255
Price to Tangible Book
Price to Cash Flow 16
Price to Free Cash Flow 29.4
Growth Rates
Sales Growth Rate 4.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 24.6%
Cap. Spend. - 3 Yr. Gr. Rate 7.5%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 3060.2%
Total Debt to Equity 3969.1%
Interest Coverage 15
Management Effectiveness
Return On Assets 9.4%
Ret/ On Assets - 3 Yr. Avg. 10.7%
Return On Total Capital 20.6%
Ret/ On T. Cap. - 3 Yr. Avg. 24.4%
Return On Equity 238.7%
Return On Equity - 3 Yr. Avg. 173.1%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 81.5%
Gross Margin - 3 Yr. Avg. 80.8%
EBITDA Margin 12.7%
EBITDA Margin - 3 Yr. Avg. 13.8%
Operating Margin 9%
Oper. Margin - 3 Yr. Avg. 10.2%
Pre-Tax Margin 8.4%
Pre-Tax Margin - 3 Yr. Avg. 9.7%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 6.4%
Effective Tax Rate 33.2%
Eff/ Tax Rate - 3 Yr. Avg. 33.9%
Payout Ratio 77%

UPS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UPS stock intrinsic value calculation we used $65872 million for the last fiscal year's total revenue generated by United Parcel Service Cl B. The default revenue input number comes from 2017 income statement of United Parcel Service Cl B. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our UPS stock valuation model: a) initial revenue growth rate of 8.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11.6%, whose default value for UPS is calculated based on our internal credit rating of United Parcel Service Cl B, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of United Parcel Service Cl B.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of UPS stock the variable cost ratio is equal to 58.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $20243 million in the base year in the intrinsic value calculation for UPS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for United Parcel Service Cl B.

Corporate tax rate of 27% is the nominal tax rate for United Parcel Service Cl B. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the UPS stock is equal to 0.9%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for UPS are equal to 39.7%.

Life of production assets of 10 years is the average useful life of capital assets used in United Parcel Service Cl B operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for UPS is equal to -5.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1000 million for United Parcel Service Cl B - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 862 million for United Parcel Service Cl B is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of United Parcel Service Cl B at the current share price and the inputted number of shares is $102.6 billion.

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COMPANY NEWS

▶ 3 Stocks for Warren Buffett Fans   [Aug-15-18 10:36AM  Motley Fool]
▶ [$$] UPS Reaches Labor Deal With Aircraft Mechanics   [Aug-14-18 08:43PM  The Wall Street Journal]
▶ [$$] UPS, Aircraft Mechanics Reach Deal   [02:38PM  The Wall Street Journal]
▶ UPS, airline mechanics reach labor deal: Here's what the Teamsters won   [09:13AM  American City Business Journals]
▶ How UPS Is Getting Back Into Good Shape   [08:06AM  Motley Fool]
▶ UPS Board Announces Quarterly Dividend   [Aug-09-18 04:15PM  GlobeNewswire]
▶ 10 Hot Stocks to Invest In Right Now   [Aug-03-18 03:32PM  InvestorPlace]
▶ UPS to deploy an electric delivery truck later this year   [Jul-31-18 11:03AM  MarketWatch]
▶ UPS to test new electric vehicle   [10:26AM  American City Business Journals]
▶ UPS To Test New Electric Vehicle   [09:00AM  GlobeNewswire]
▶ UPS Delivers Gains to Call Buyers, After Earnings   [Jul-26-18 04:10PM  TheStreet.com]
▶ Company News For Jul 26, 2018   [10:20AM  Zacks]
▶ [$$] UPS Sees Growth Driven by Higher Pricing, E-commerce Demand   [Jul-25-18 08:14PM  The Wall Street Journal]
▶ Four Big Movers in the Blitz   [02:13PM  CNBC Videos]
▶ The Top 4 UPS Shareholders (UPS)   [10:51AM  Investopedia]
▶ UPS Rises After Second-Quarter Earnings Beat   [09:36AM  TheStreet.com]
▶ UPS Q2 Earnings Preview   [03:12PM  Benzinga]
▶ The Morning Download: UPS Expands Role of Predictive Analytics   [Jul-18-18 08:15AM  The Wall Street Journal]
▶ UPS Pilots Keyless Deliveries In New York City   [Jul-17-18 04:44PM  Benzinga]
▶ UPS expanding partnership for 'smart access' in NYC   [03:09PM  American City Business Journals]
▶ UBS Changes Its Views on UPS, FedEx   [12:10PM  Investopedia]
▶ UPS & FedEx: Buy One, Skip the Other   [10:27AM  Barrons.com]
▶ EXCLUSIVE: Cincinnati firm to fulfill largest electric truck order ever   [Jul-12-18 02:20PM  American City Business Journals]
▶ Why UPS Stock Has Slumped So Far in 2018   [08:14AM  Motley Fool]
▶ UPS among companies granted Facebook data extension   [Jul-06-18 11:51AM  American City Business Journals]
▶ Why UPS Stock Can Rise 30%   [06:00AM  Investopedia]
▶ UPS, FedEx to Outperform: Bernstein Analysts   [Jul-03-18 01:28PM  Investopedia]
▶ UPS, FedEx Shares Carry Upside   [Jul-02-18 02:11PM  Barrons.com]
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