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.