Inside Wall Street
CONSOLIDATED MAY REALLY DELIVER
Same-day local couriers are zooming into the fast lane, but the bull market has left the stocks of these delivery companies in the dust. One of them is Consolidated Delivery & Logistics (CDLI), which went public on Nov. 21 at 13 a share and now trades at 9. Yet some pros are bullish. They argue that Consolidated will grow fast by acquiring efficient mom-and-pop operations. So far, it has bought 11 companies and is set to buy more this year.
One of the nation's largest couriers, Consolidated focuses on intra-city deliveries but also provides same-day inter-city air and ground service to businesses. The same-day industry has annual sales of $15 billion, while the two-day service, dominated by Federal Express and UPS, is a $6 billion market.
That may explain why FedEx and UPS in April entered the same-day intra-city business (through partners, partly because their vehicles aren't designed for such delivery). Betting among some pros is that Consolidated will become a FedEx or UPS target. "Consolidated becomes an attractive acquisition candidate for either," says Thom Albrecht, an analyst at A.G. Edwards & Sons. Rather than build their own same-day national networks, FedEx and UPS are apt to buy an outfit that already has one, he says.
"Consolidated is the best pure play in local delivery," says Albrecht. Chairman John Mattei doesn't quarrel with Albrecht's estimates: 85 cents a share in 1996 on sales of $250 million and $1.10 in 1997 on $325 million, up from 1995's estimated 40 cents on sales of $150 million.BY GENE G. MARCIAL