Case ID: 103015
Solution ID: 3282
Words: 1996
Price $ 75

United Parcel Services IPO Case Solution

Case Solution

UPS, an worker-possessed firm, may be the biggest parcel company on the planet and produced a yearly profit of $1.7 billion in 1999. UPS needs to be noted for its stable financial performance and things to look for. UPS has broadened its physical scope along with its technological abilities to be able to stand above its rivals. It's questionable whether UPS will have the ability to sustain the development in in the future because of the reduction in development of the delivery industry.  In 1999, UPS introduced an IPO of 109 million shares. Therefore, valuation of UPS Stock grew to become a vital decision for that firm. Its valuation of UPS IPO is depend-ant on its comparison with FedEx or on Better of Breed basis. Therefore, the stock value is $17,520 million and $30,415 Million in line with the market capital while using stock cost along with other multiples of FedEx shares.

Excel Calculations

Comparison of UPS and FedEx 1998 financial performance

Operating Lease Present Value

  NPV -1999-2004

Best-of-Breed valuation

Stock Price, Market Cap, Net Income, ROE, Price to Earning, Market to book

Questions Covered

What are the key success factors and risks for UPS given its business strategy?

How is UPS performing?  What factors are driving this performance?  Is the current performance likely to be sustained?  Why or why not?

How is FedEx performing?  How, if at all, does its performance and plans affect your assessment of the sustainability of UPS=s current performance?

Given your assessment of the company=s strategy and the sustainability of its performance, forecast the key factors for UPS=

What is your estimate of UPS=s value and its multiples?

How do your estimates of UPS=s PE and PB multiples compare with those for FedEx?  How do they compare with those for the Abest in breed@ companies multiples?