Which Blue Chip Shipping Stock Has the Strongest Earnings Trends: UPS or FedEx?

Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

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Here’s your Cheat Sheet to how the top 2 shipping stocks rank via earnings trends:

United Parcel Service, Inc. (NYSE:UPS): Current Price $79.97

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 51,490 45,300 49,540 53,100 54,130
Diluted EPS ($) 2.94 1.96 3.33 3.84 0.83

Annual revenue at UPS has shown a rising trend after 2009, and so did EPS until 2011. But earnings plunged in 2012.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 14,170 13,140 13,350 13,070 14,570
Diluted EPS ($) 0.75 1.00 1.15 0.48 -1.83

Quarterly revenue trends have been mixed, but sales moved up sharply in the latest December 2012 quarter. Unfortunately, EPS went the other direction, reporting a massive negative figure. Will FedEx show better trends? Let’s find out…

FedEx (NYSE:FDX): Current Price $102.76

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 37,950 35,500 34,730 39,300 42,680
Diluted EPS ($) 3.60 0.31 3.76 4.57 6.41

Annual revenue hit a trough in 2010, but then turned around smartly. Earning per share has followed suit with impressive growth every year.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Nov. 30, 2011 Feb. 29, 2012 May. 31, 2012 Aug. 31, 2012 Nov. 30, 2012
Revenue ($) in millions 10,590 10,560 11,010 10,790 11,110
Diluted EPS ($) 1.57 1.65 1.73 1.45 1.39

Quarterly revenue performance is not too encouraging, remaining essentially flat over the last three quarters. Worse, EPS has declined over the last two quarters.

Conclusion

Unfortunately, both these shipping companies fail the litmus test of the “E-Squared” investment analysis as neither has grown its earnings quarter over quarter.

“E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our successful CHEAT SHEET investing framework. Don’t waste another minute – click here to discover our CHEAT SHEET stock picks now!