UPS Is Still a Good Long-Term Bet Despite Holiday Blues

NEW YORK (TheStreet) -- Investors who are looking for a beaten-down company with upside may want to consider United Parcel Service , the giant delivery company which earlier Tuesday reported a 61% drop in its fourth-quarter profit, largely on higher expenses. The stock -- which was recently trading at $99.68, down 45 cents -- is down 10% year to date, trailing the broader market. Must Read: Warren Buffet’s Top 10 Dividend Stocks for 2015 The shares fell last month after UPS said its fourth-quarter profit would be lower than expected because of higher expenses than it had projected. In December 2013, UPS failed to make many online deliveries by Christmas Eve, and this past year, it tried to remedy the situation by spending a lot more to shore up its network for the holidays. That hit its earnings hard as total operating expenses for the fourth quarter rose 15.9%. The outlook, however, is still bright as the company is projecting a long-term earnings growth rate of 9% to 13%. On Tuesday, CEO David Abney said UPS will reach that goal by controlling expenses and raising prices. "As we move into 2015, we will address this disparity with both cost and revenue actions. We will take actions necessary to improve profitability by increasing operational efficiency and adjusting price where appropriate," Abney said in a statement. UPS may benefit from the trend of more consumers ordering goods online and having them shipped. In the fourth quarter, global shipments rose 8.1% from a year earlier, and revenue rose 6.1% to $15.9 billion, topping analysts' estimates. Must Read: When Must I Buy a Stock to Get the Dividend? TheStreet Ratings team rates UNITED PARCEL SERVICE INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation: "We rate UNITED PARCEL SERVICE INC (UPS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, growth in earnings per share, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated." You can view the full analysis from the report here: UPS Ratings Report

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