2024-02-21 12:45:01 ET
Summary
- The transportation industry struggles with lower demand and operating costs due to a labor shortage.
- United Parcel Service has seen a decline in its stock value despite positive factors such as depressed valuation and AI investments.
- UPS' immediate profit potential is declining, but its long-term growth potential from AI adoption could be significant.
- The company may be slightly overvalued as it appears possible its EPS outlook will continue to decline due to falling macroeconomic demand drivers.
While most of the stock market has performed well in recent months, some segments have not kept up. Notably, the transportation industry has struggled with lower demand and, more importantly, significantly higher operating and input costs. That trend is evident from air travel to ground package transportation. Fundamentally, the cost of paying transportation operators is rising too quickly compared to the demand for transportation, stemming from the industry's labor shortage. Previously, high fuel prices also created issues for the transportation industry. Still, the wage issue is large enough that costs typically have not declined despite a significant drop in fuel costs since 2022....
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United Parcel Service: Falling Retail Sales And Transportation Prices Add To Woes