Since the beginning of the pandemic, the delivery business has been booming. Passenger planes are converted to cargo planes. Ride-hailing apps swift their focus from carrying people to delivering food. Two traditional package delivery and supply chain management companies, UPS and FedEx saw tremendous volume in the past several months, which were priced in their stocks. UPS bottomed at $86.17 on March 12 and peaked at $176.54 on October 12. That is more than a 100% increase in seven months. Meanwhile, FedEx reached the lowest point at $90.49 on March 16 and the highest point at $287.4 on October 20. That is more than a 200% increase. The difference in their trajectories is worth digging - FedEx is somehow doing better. We need to find out why.

REQUIREMENT

 Find the most recent form 10-Q (quarterly financial report filed with the SEC) for both companies, FedEx 831 and UPS 930. The forms will give you a ton of information. Hint: To find form 10-Q, go to the SEC EDGAR website and search “UPS” and “FDX” in the “Company and Person Lookup” box. Those are tickers. If you search the names, for example, “FedEx” instead, you will get many FedEx associated companies. Do not search the names.

Discuss the similarities and differences between the two companies. (10 POINTS) Hint: Think about the geographics they operate, the size in terms of revenue/assets/number of employees (if available), and business segments. Also think about the trajectory of their stocks since 2000: What do they tell you? Investigate the background of the current CEOs in terms of education and experience. Add anything you would like to talk about. Turn to “Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition”.

Analyze revenue, expenses, and profitability for both companies. (20 POINTS)  Identify the drivers for revenue and expenses. What segments contribute to the revenue? What are the major expense items for each segment? How do revenue and expenses change period over period for each segment? What is the volume in terms of daily package, cargo shipment, etc? Do the increases in revenue and expenses match the increase in volume? Overall, how profitable are UPS and FedEx? Do you think the difference in their share prices can be justified by the financial performance?

Look at Operating Expenses on the Statements of Consolidated Income / Consolidated Statements of Income, which of them could be variable, and which of them are more likely fixed? If you were the CFO to cut expenses for the fiscal year 2020, what would you do?

Answer rating: 100% (QA)

while UPS is widely known for its domestic ground package delivery FEDEX is mostly recognized for ... View the full answer