After two consecutive years of problems during its holiday peak package season, UPS delivered on time at Christmas this year while its main rival FedEx had a last-minute stumble that left some gifts undelivered until after the holiday.
"It seems like the third time's a charm for UPS," said Kent Winegar, portfolio manager at Austin, Texas-based Terry McDaniel & Co, which manages assets of around $900 million and holds nearly $15 million in UPS stock. "But if e-commerce keeps growing at such a rapid rate we'll see how they do next year."
A late surge in e-commerce orders and bad weather in 2013 left an estimated 2 million packages undelivered on Christmas Eve, mostly stranded in Atlanta-based United Parcel Service's package network. Arch rival FedEx experienced problems on a smaller scale. Last year, UPS spent $500 million, boosted seasonal hiring and worked with retailers to forecast package volumes that failed to materialize and overspending hurt fourth-quarter earnings. FedEx did not experience problems that year.