UPS Shows You How To Make Profits Explode On Virtually No Growth

It’s always interesting reading through the earnings reports of companies like UPS and FedEx, which have a reputation for being pretty reliable economic bellwethers.

For UPS, which just came out with earnings, things are going great, with profits and revenue booming.

Take a look though at the domestic business:


So volume growth was virtually non-existent, from 12.62M/day last year to 12.63M/day this year.

And yet domestic package profits jumped 29.1%

It’s the miracle of inflation — pricing, which jumped from $7.27 billion to $7.74 billion — and productivity, keeping compensation and other growth minimal.

So the numbers are great for the stock, but this is why everyone’s worried about margins, and hence why a lot of people are worried about stocks, despite “cheap” PEs.

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