United Parcel Service

Methodology

UPS's fair value calculation is complicated by the cyclical nature of package volumes and the company's high operational leverage, where earnings fluctuate significantly with e-commerce trends and economic conditions. The method works best when normalized for mid-cycle volumes and pricing, as peak periods during e-commerce surges and trough periods during economic slowdowns create misleading valuation signals. Investors should also consider that network density and barriers to entry provide franchise value beyond current earnings levels.

Methodology

PEG ratios for UPS can be volatile because growth rates swing with e-commerce penetration, economic cycles, and competitive dynamics with FedEx and regional carriers. Low PEG ratios during volume surges may signal peak earnings rather than value, while high ratios during weak demand may represent opportunity if the network retains pricing power. Investors should compare UPS's PEG to FedEx and historical ranges while emphasizing operating margin trends and capital efficiency over the ratio itself.

Methodology

UPS pays a substantial dividend reflecting the cash-generative nature of its integrated logistics network, making PEGY particularly relevant for evaluating total return potential during periods of volume volatility or margin pressure. The dividend provides tangible return when package volumes are pressured by economic weakness or e-commerce normalization. For income-focused investors, PEGY captures the combination of modest growth and attractive yield that characterizes mature logistics networks.