Speaking exclusively to Benzinga, Morningstar Director of Industrials Equity Research Keith Schoonmaker said while Pershing Square's investment in the Canadian Pacific Railway Limited (NYSE: CP) was a “tremendous success,” he doesn't see the same opportunity for United Parcel Service, Inc. (NYSE: UPS).
Schoonmaker noted UPS as the highest margin integrated shipper, whereas Canadian Pacific was the only lagging railroad in need of a turnaround. He said there isn't much room for divestitures or financial engineering.
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The Morningstar analyst said the company isn't critical of UPS' capital expenditures budget at about 4.5 percent of sales, which is considerable lower than that of FedEx Corporation (NYSE: FDX), about 8 percent of sales.
“From our perspective, it would seem harder to move the needle at UPS, compared to Pershing's most recent large transportation investment (Canadian Pacific),” he said.