Intrinsic value of United Parcel Service Cl B - UPS

Previous Close

$115.77

  Intrinsic Value

$109.05

stock screener

  Rating & Target

hold

-6%

Previous close

$115.77

 
Intrinsic value

$109.05

 
Up/down potential

-6%

 
Rating

hold

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 0001), $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 80.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.60
  9.14
  8.73
  8.35
  8.02
  7.72
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
Revenue, $m
  72,196
  78,794
  85,670
  92,826
  100,269
  108,006
  116,047
  124,402
  133,086
  142,112
  151,497
  161,259
  171,417
  181,992
  193,007
  204,485
  216,452
  228,935
  241,963
  255,564
  269,772
  284,618
  300,139
  316,369
  333,348
  351,117
  369,716
  389,191
  409,587
  430,954
Variable operating expenses, $m
  42,178
  45,980
  49,942
  54,065
  58,353
  62,810
  67,443
  72,257
  77,260
  82,460
  87,284
  92,908
  98,760
  104,853
  111,199
  117,812
  124,707
  131,899
  139,404
  147,241
  155,426
  163,980
  172,922
  182,273
  192,055
  202,292
  213,008
  224,229
  235,980
  248,290
Fixed operating expenses, $m
  20,705
  21,160
  21,626
  22,101
  22,588
  23,085
  23,593
  24,112
  24,642
  25,184
  25,738
  26,304
  26,883
  27,475
  28,079
  28,697
  29,328
  29,973
  30,633
  31,307
  31,995
  32,699
  33,419
  34,154
  34,905
  35,673
  36,458
  37,260
  38,080
  38,917
Total operating expenses, $m
  62,883
  67,140
  71,568
  76,166
  80,941
  85,895
  91,036
  96,369
  101,902
  107,644
  113,022
  119,212
  125,643
  132,328
  139,278
  146,509
  154,035
  161,872
  170,037
  178,548
  187,421
  196,679
  206,341
  216,427
  226,960
  237,965
  249,466
  261,489
  274,060
  287,207
Operating income, $m
  9,313
  11,654
  14,103
  16,660
  19,329
  22,111
  25,011
  28,034
  31,184
  34,468
  38,475
  42,047
  45,774
  49,664
  53,729
  57,976
  62,417
  67,063
  71,926
  77,017
  82,350
  87,939
  93,798
  99,942
  106,388
  113,151
  120,250
  127,702
  135,528
  143,747
EBITDA, $m
  12,119
  14,663
  17,323
  20,101
  22,999
  26,020
  29,167
  32,447
  35,864
  39,426
  43,139
  47,011
  51,050
  55,267
  59,670
  64,271
  69,080
  74,110
  79,374
  84,884
  90,654
  96,700
  103,037
  109,681
  116,649
  123,959
  131,631
  139,683
  148,136
  157,012
Interest expense (income), $m
  373
  1,312
  1,332
  1,554
  1,786
  2,026
  2,277
  2,537
  2,807
  3,088
  3,380
  3,684
  4,000
  4,328
  4,670
  5,025
  5,396
  5,782
  6,184
  6,604
  7,042
  7,500
  7,978
  8,477
  8,999
  9,545
  10,116
  10,713
  11,339
  11,994
  12,680
Earnings before tax, $m
  8,001
  10,322
  12,548
  14,875
  17,302
  19,835
  22,475
  25,227
  28,096
  31,087
  34,791
  38,047
  41,446
  44,995
  48,703
  52,580
  56,636
  60,879
  65,321
  69,975
  74,850
  79,961
  85,321
  90,943
  96,843
  103,035
  109,536
  116,363
  123,534
  131,066
Tax expense, $m
  2,160
  2,787
  3,388
  4,016
  4,672
  5,355
  6,068
  6,811
  7,586
  8,394
  9,394
  10,273
  11,190
  12,149
  13,150
  14,197
  15,292
  16,437
  17,637
  18,893
  20,210
  21,590
  23,037
  24,555
  26,148
  27,819
  29,575
  31,418
  33,354
  35,388
Net income, $m
  5,841
  7,535
  9,160
  10,858
  12,631
  14,479
  16,406
  18,416
  20,510
  22,694
  25,398
  27,774
  30,255
  32,846
  35,554
  38,384
  41,344
  44,442
  47,685
  51,081
  54,641
  58,372
  62,284
  66,389
  70,695
  75,216
  79,961
  84,945
  90,180
  95,679

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
  49,962
  54,529
  59,287
  64,240
  69,390
  74,745
  80,309
  86,092
  92,101
  98,347
  104,842
  111,598
  118,627
  125,946
  133,569
  141,512
  149,794
  158,433
  167,448
  176,861
  186,693
  196,968
  207,708
  218,941
  230,691
  242,987
  255,859
  269,336
  283,451
  298,238
Adjusted assets (=assets-cash), $m
  49,962
  54,529
  59,287
  64,240
  69,390
  74,745
  80,309
  86,092
  92,101
  98,347
  104,842
  111,598
  118,627
  125,946
  133,569
  141,512
  149,794
  158,433
  167,448
  176,861
  186,693
  196,968
  207,708
  218,941
  230,691
  242,987
  255,859
  269,336
  283,451
  298,238
Revenue / Adjusted assets
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
  1.445
Average production assets, $m
  25,557
  27,893
  30,327
  32,861
  35,495
  38,234
  41,081
  44,038
  47,112
  50,308
  53,630
  57,086
  60,682
  64,425
  68,324
  72,388
  76,624
  81,043
  85,655
  90,470
  95,499
  100,755
  106,249
  111,995
  118,005
  124,295
  130,879
  137,774
  144,994
  152,558
Working capital, $m
  3,032
  3,309
  3,598
  3,899
  4,211
  4,536
  4,874
  5,225
  5,590
  5,969
  6,363
  6,773
  7,200
  7,644
  8,106
  8,588
  9,091
  9,615
  10,162
  10,734
  11,330
  11,954
  12,606
  13,288
  14,001
  14,747
  15,528
  16,346
  17,203
  18,100
Total debt, $m
  24,675
  28,785
  33,067
  37,525
  42,160
  46,979
  51,987
  57,192
  62,600
  68,222
  74,067
  80,147
  86,474
  93,060
  99,921
  107,070
  114,524
  122,298
  130,412
  138,884
  147,733
  156,980
  166,646
  176,755
  187,331
  198,398
  209,982
  222,112
  234,815
  248,123
Total liabilities, $m
  44,966
  49,076
  53,358
  57,816
  62,451
  67,270
  72,278
  77,483
  82,891
  88,513
  94,358
  100,438
  106,765
  113,351
  120,212
  127,361
  134,815
  142,589
  150,703
  159,175
  168,024
  177,271
  186,937
  197,046
  207,622
  218,689
  230,273
  242,403
  255,106
  268,414
Total equity, $m
  4,996
  5,453
  5,929
  6,424
  6,939
  7,474
  8,031
  8,609
  9,210
  9,835
  10,484
  11,160
  11,863
  12,595
  13,357
  14,151
  14,979
  15,843
  16,745
  17,686
  18,669
  19,697
  20,771
  21,894
  23,069
  24,299
  25,586
  26,934
  28,345
  29,824
Total liabilities and equity, $m
  49,962
  54,529
  59,287
  64,240
  69,390
  74,744
  80,309
  86,092
  92,101
  98,348
  104,842
  111,598
  118,628
  125,946
  133,569
  141,512
  149,794
  158,432
  167,448
  176,861
  186,693
  196,968
  207,708
  218,940
  230,691
  242,988
  255,859
  269,337
  283,451
  298,238
Debt-to-equity ratio
  4.940
  5.280
  5.580
  5.840
  6.080
  6.290
  6.470
  6.640
  6.800
  6.940
  7.060
  7.180
  7.290
  7.390
  7.480
  7.570
  7.650
  7.720
  7.790
  7.850
  7.910
  7.970
  8.020
  8.070
  8.120
  8.160
  8.210
  8.250
  8.280
  8.320
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
  5,841
  7,535
  9,160
  10,858
  12,631
  14,479
  16,406
  18,416
  20,510
  22,694
  25,398
  27,774
  30,255
  32,846
  35,554
  38,384
  41,344
  44,442
  47,685
  51,081
  54,641
  58,372
  62,284
  66,389
  70,695
  75,216
  79,961
  84,945
  90,180
  95,679
Depreciation, amort., depletion, $m
  2,806
  3,009
  3,221
  3,441
  3,670
  3,908
  4,156
  4,413
  4,680
  4,958
  4,663
  4,964
  5,277
  5,602
  5,941
  6,295
  6,663
  7,047
  7,448
  7,867
  8,304
  8,761
  9,239
  9,739
  10,261
  10,808
  11,381
  11,980
  12,608
  13,266
Funds from operations, $m
  8,647
  10,544
  12,381
  14,300
  16,301
  18,388
  20,562
  22,829
  25,190
  27,652
  30,061
  32,738
  35,532
  38,448
  41,495
  44,678
  48,007
  51,489
  55,133
  58,948
  62,945
  67,133
  71,523
  76,127
  80,957
  86,024
  91,342
  96,925
  102,788
  108,944
Change in working capital, $m
  266
  277
  289
  301
  313
  325
  338
  351
  365
  379
  394
  410
  427
  444
  463
  482
  503
  524
  547
  571
  597
  624
  652
  682
  713
  746
  781
  818
  857
  897
Cash from operations, $m
  8,381
  10,267
  12,092
  13,999
  15,988
  18,063
  20,225
  22,478
  24,826
  27,273
  29,667
  32,328
  35,105
  38,004
  41,032
  44,196
  47,504
  50,965
  54,586
  58,377
  62,348
  66,510
  70,872
  75,446
  80,244
  85,278
  90,561
  96,108
  101,931
  108,047
Maintenance CAPEX, $m
  -2,026
  -2,222
  -2,425
  -2,637
  -2,857
  -3,087
  -3,325
  -3,572
  -3,829
  -4,097
  -4,375
  -4,663
  -4,964
  -5,277
  -5,602
  -5,941
  -6,295
  -6,663
  -7,047
  -7,448
  -7,867
  -8,304
  -8,761
  -9,239
  -9,739
  -10,261
  -10,808
  -11,381
  -11,980
  -12,608
New CAPEX, $m
  -2,261
  -2,336
  -2,434
  -2,533
  -2,635
  -2,739
  -2,846
  -2,958
  -3,074
  -3,195
  -3,322
  -3,456
  -3,596
  -3,744
  -3,899
  -4,063
  -4,236
  -4,419
  -4,612
  -4,815
  -5,029
  -5,256
  -5,494
  -5,746
  -6,011
  -6,290
  -6,584
  -6,894
  -7,220
  -7,564
Cash from investing activities, $m
  -4,287
  -4,558
  -4,859
  -5,170
  -5,492
  -5,826
  -6,171
  -6,530
  -6,903
  -7,292
  -7,697
  -8,119
  -8,560
  -9,021
  -9,501
  -10,004
  -10,531
  -11,082
  -11,659
  -12,263
  -12,896
  -13,560
  -14,255
  -14,985
  -15,750
  -16,551
  -17,392
  -18,275
  -19,200
  -20,172
Free cash flow, $m
  4,095
  5,708
  7,233
  8,828
  10,496
  12,237
  14,053
  15,948
  17,922
  19,981
  21,970
  24,209
  26,545
  28,984
  31,531
  34,192
  36,973
  39,883
  42,927
  46,114
  49,452
  52,950
  56,616
  60,461
  64,494
  68,726
  73,169
  77,833
  82,730
  87,875
Issuance/(repayment) of debt, $m
  386
  4,110
  4,282
  4,457
  4,636
  4,819
  5,008
  5,204
  5,408
  5,622
  5,845
  6,080
  6,327
  6,587
  6,860
  7,149
  7,454
  7,775
  8,114
  8,472
  8,849
  9,247
  9,667
  10,109
  10,575
  11,067
  11,584
  12,130
  12,704
  13,308
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  
  386
  4,110
  4,282
  4,457
  4,636
  4,819
  5,008
  5,204
  5,408
  5,622
  5,845
  6,080
  6,327
  6,587
  6,860
  7,149
  7,454
  7,775
  8,114
  8,472
  8,849
  9,247
  9,667
  10,109
  10,575
  11,067
  11,584
  12,130
  12,704
  13,308
Total cash flow (excl. dividends), $m
  4,481
  9,818
  11,515
  13,286
  15,132
  17,056
  19,061
  21,152
  23,331
  25,603
  27,815
  30,289
  32,872
  35,571
  38,391
  41,341
  44,427
  47,657
  51,041
  54,585
  58,301
  62,197
  66,283
  70,570
  75,070
  79,793
  84,753
  89,962
  95,434
  101,183
Retained Cash Flow (-), $m
  -4,002
  -457
  -476
  -495
  -515
  -535
  -556
  -578
  -601
  -625
  -649
  -676
  -703
  -732
  -762
  -794
  -828
  -864
  -902
  -941
  -983
  -1,027
  -1,074
  -1,123
  -1,175
  -1,230
  -1,287
  -1,348
  -1,412
  -1,479
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
  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 available for distribution, $m
  479
  9,362
  11,039
  12,790
  14,617
  16,521
  18,505
  20,573
  22,730
  24,978
  27,166
  29,614
  32,169
  34,839
  37,629
  40,546
  43,599
  46,794
  50,139
  53,644
  57,318
  61,169
  65,209
  69,447
  73,894
  78,563
  83,466
  88,614
  94,023
  99,704
Discount rate, %
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.10
  33.71
  35.40
  37.17
  39.02
  40.97
  43.02
  45.17
  47.43
  49.81
PV of cash for distribution, $m
  427
  7,370
  7,582
  7,571
  7,360
  6,979
  6,463
  5,849
  5,173
  4,471
  3,755
  3,099
  2,496
  1,961
  1,501
  1,119
  811
  571
  390
  258
  166
  103
  61
  35
  20
  10
  5
  3
  1
  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 29.3
Price to Sales 1.6
Price to Book 248.1
Price to Tangible Book
Price to Cash Flow 15.5
Price to Free Cash Flow 28.6
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 0001 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 9.6% 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 12.1%, 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 $20259 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%.

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 35.4%.

Life of production assets of 11.5 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 4.2%. 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 - $994 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 693.389 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 $80.3 billion.

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COMPANY NEWS

▶ Macy's adds CEO of corporate giant to board   [Oct-16-18 09:29AM  American City Business Journals]
▶ UPS, Hartsfield airport primed for October hiring blitz in Atlanta   [01:14PM  American City Business Journals]
▶ FedEx Decline Could Signal Economic Slowdown   [Oct-10-18 10:55AM  Investopedia]
▶ UPS contract ratification deepens a divide among Teamsters   [Oct-09-18 02:16PM  American City Business Journals]
▶ Teamsters ratify UPS contract, despite most voting against it   [Oct-08-18 02:38PM  American City Business Journals]
▶ [$$] Stocks to Watch: Amazon, GE, Facebook, Home Depot   [09:24AM  The Wall Street Journal]
▶ Teamsters, UPS to Resume Talks After Workers Reject Contract   [Oct-07-18 08:12PM  The Wall Street Journal]
▶ [$$] Teamsters Reject UPS Contract   [Oct-06-18 12:17AM  The Wall Street Journal]
▶ [$$] Teamsters Reject UPS Contract   [Oct-05-18 09:50PM  The Wall Street Journal]
▶ Teamsters ratify UPS contract, despite most voting against it   [09:09PM  American City Business Journals]
▶ [$$] Cache of 400 Guns Is Recovered After Theft From Memphis UPS Facility   [Oct-02-18 05:45PM  The Wall Street Journal]
▶ UPS airline mechanics reject labor deal   [02:20PM  American City Business Journals]
▶ Can UPS keep up with Amazon on wages and workers?   [11:48AM  American City Business Journals]
▶ 5 Reasons Why UPS Will Outperform: BMO   [10:26AM  Investopedia]
▶ As Boeing celebrates 50 years of the 747, entrepreneurs find new uses for famous jet   [Oct-01-18 06:04PM  American City Business Journals]
▶ KeyBanc Calls UPS Valuation 'Reasonable'   [Sep-27-18 01:06PM  Benzinga]
▶ UPS plans $3.8 million expansion in Louisville   [12:36PM  American City Business Journals]
▶ Home Depot adds same-day, next-day local delivery in Atlanta   [11:33AM  American City Business Journals]
▶ McDonald's to host hiring event for 105 Central Florida locations   [Sep-25-18 05:16PM  American City Business Journals]
▶ Transport Stalwart XPO Logistics Is a Double-Digit Winner   [Sep-24-18 08:22AM  InvestorPlace]
▶ UPS to add jobs in Orlando for the holidays   [Sep-21-18 01:24PM  American City Business Journals]
▶ UPS, Kohl's lining up seasonal hiring plans around Tampa   [Sep-20-18 01:47PM  American City Business Journals]
▶ Why UPS is hiring fewer people in Louisville this peak season   [01:08PM  American City Business Journals]
▶ UPS To Hire About 100,000 For Holiday Season   [10:15AM  GlobeNewswire]
▶ How the world's biggest airport got its new leader   [03:45AM  American City Business Journals]
▶ [$$] UPS Lays Out Plans for More-Profitable Shipping   [Sep-13-18 08:06PM  The Wall Street Journal]
▶ [$$] UPS Lays Out Plans for More-Profitable Shipping   [01:40PM  The Wall Street Journal]
▶ Should UPS be concerned about Amazon's order of 20,000 vans?   [02:32PM  American City Business Journals]
▶ City of Atlanta picks JFK deputy commissioner as new Hartsfield-Jackson GM   [Sep-11-18 06:29AM  American City Business Journals]
▶ 6 Companies That Invest in Themselves   [Sep-10-18 11:56AM  Kiplinger]
▶ Teamsters to vote on UPS contract starting this week   [11:27AM  American City Business Journals]
▶ Buy UPS's Transformation, Goldman Says   [10:49AM  TheStreet.com]
▶ 5 Stocks Bill Gates and Warren Buffett Both Own   [Sep-07-18 07:03PM  GuruFocus.com]

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