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FDX vs. UPS: Which Stock Is the Better Value Option?

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Investors interested in Transportation - Air Freight and Cargo stocks are likely familiar with FedEx (FDX - Free Report) and United Parcel Service (UPS - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

FedEx has a Zacks Rank of #2 (Buy), while United Parcel Service has a Zacks Rank of #3 (Hold) right now. This means that FDX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

FDX currently has a forward P/E ratio of 11.11, while UPS has a forward P/E of 14.44. We also note that FDX has a PEG ratio of 0.87. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. UPS currently has a PEG ratio of 1.56.

Another notable valuation metric for FDX is its P/B ratio of 2.65. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, UPS has a P/B of 28.69.

Based on these metrics and many more, FDX holds a Value grade of B, while UPS has a Value grade of C.

FDX has seen stronger estimate revision activity and sports more attractive valuation metrics than UPS, so it seems like value investors will conclude that FDX is the superior option right now.


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