United Parcel Service, Inc. (UPS)

Discount cash flow analysis

Sell Overvalued by 61.2%

5% margin of safety What's this?


How does this work?

This is an interactive analyst report for United Parcel Service, Inc., based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

Values in $ millions
2007 2008 2009 2010 2011 2012 2013 2014

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Price history

Sensitivity matrix

Discount Rate %

  -1% $43.09 $42.30 $41.55
Terminal Growth% 0 $43.36 $42.57 $41.80
  +1% $43.64 $42.83 $42.06

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $78.86 (overvalued by 28.09%) - over 1 year ago
  • SethWellbourne created a new valuation of $35.84 (overvalued by 26.27%) - almost 9 years ago
  • TheCrunchBlog created a new valuation of $42.57 (overvalued by 11.55%) - over 9 years ago
  • GordonGekko created a new valuation of $50.43 (undervalued by 8.71%) - over 9 years ago


Running The Numbers - intrinsic valuation for Brown ($UPS)

This valuation is part of this blog post:



Revenue: Reuters aggregates 12 analysts covering $UPS and these analysts have mean estimates of 2008 and 2009 revenues of US$52.8 billion and US$56.4 billion respectively. For our analysis we have used US$52.0 billion in 2008, US$54.0 billion in 2009 and US$58.0 billion in 2010. We are worried about near term global economic conditions - which will impact companies like $UPS.

Profitability: We have used an EBITDA margin of 15.0% flat to 2010.

Capital Expenditure: We have assumed capital expenditures of US$2.85 billion in 2008 and then US$3.0 billion per annum moving forward.

Discount Rate: 10.0%. We believe that a discount rate in the 9-10% range is reasonable. Dropping the discount rate to 9% increases the valuation to US$51.75 (7.5% above the current share price).

Terminal Growth Rate: 3.5%.

Our analysis incorporates the cash and debt the $UPS balance sheet – Valuecruncher calculates a net debt number.

By TheCrunchBlog, over 9 years ago


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By Prolorihoro, over 8 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 118,969
Net Debt (Long-term borrowings less cash): 8,414
Equity Value: 48,522
Number of Shares Outstanding: 1,008,000,000
Calculated value per share: $42.57

Enterprise Value is the present value of the post-tax cash flows for a business into the future.

Calcuation of EV


  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.



  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.

CAPM model


  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.