United Parcel Service (UPS)
Market Price (5/6/2026): $98.02 | Market Cap: $83.2 BilSector: Industrials | Industry: Air Freight & Logistics
United Parcel Service (UPS)
Market Price (5/6/2026): $98.02Market Cap: $83.2 BilSector: IndustrialsIndustry: Air Freight & Logistics
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 13%, Dividend Yield is 6.5%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 9.3%, FCF Yield is 5.7% Stock buyback supportStock Buyback 3Y Total is 3.8 Bil Attractive cash flow generationCFO LTM is 8.4 Bil, FCF LTM is 4.8 Bil Low stock price volatilityVol 12M is 30% Megatrend and thematic driversMegatrends include E-commerce & Digital Retail, E-commerce & DTC Adoption, Automation & Robotics, and Future of Freight. Show more. | Weak multi-year price returns2Y Excs Rtn is -69%, 3Y Excs Rtn is -110% | Weak revenue growthRev Chg LTMRevenue Change % Last Twelve Months (LTM) is -2.6%, Rev Chg 3Y AvgRevenue Change % averaged over trailing 3 years is -4.0%, Rev Chg QQuarterly Revenue Change % is -3.2% Key risksUPS key risks include [1] potential operational disruptions from ongoing labor disputes with the Teamsters union and [2] a significant revenue impact from its strategic decision to drastically reduce volume from its former largest customer, Show more. |
| Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 13%, Dividend Yield is 6.5%, ERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is 9.3%, FCF Yield is 5.7% |
| Stock buyback supportStock Buyback 3Y Total is 3.8 Bil |
| Attractive cash flow generationCFO LTM is 8.4 Bil, FCF LTM is 4.8 Bil |
| Low stock price volatilityVol 12M is 30% |
| Megatrend and thematic driversMegatrends include E-commerce & Digital Retail, E-commerce & DTC Adoption, Automation & Robotics, and Future of Freight. Show more. |
| Weak multi-year price returns2Y Excs Rtn is -69%, 3Y Excs Rtn is -110% |
| Weak revenue growthRev Chg LTMRevenue Change % Last Twelve Months (LTM) is -2.6%, Rev Chg 3Y AvgRevenue Change % averaged over trailing 3 years is -4.0%, Rev Chg QQuarterly Revenue Change % is -3.2% |
| Key risksUPS key risks include [1] potential operational disruptions from ongoing labor disputes with the Teamsters union and [2] a significant revenue impact from its strategic decision to drastically reduce volume from its former largest customer, Show more. |
Qualitative Assessment
AI Analysis | Feedback
1. Cautious outlook and mixed Q1 2026 financial performance, despite beating estimates.
United Parcel Service reported its first-quarter 2026 earnings on April 28, 2026, with adjusted earnings per share (EPS) of $1.07, exceeding analysts' estimates of $1.02, and revenue of $21.2 billion, topping the $21.0 billion consensus. Despite these beats, revenue was down 1.4% year-over-year, and the consolidated operating margin for the quarter was 6.2%. Management maintained its full-year 2026 revenue guidance of approximately $89.7 billion and an adjusted operating margin of about 9.6%, but acknowledged several risks, including rising fuel costs and softening U.S. consumer confidence, which created a cautious tone among investors. Some analysts noted concerns regarding the year-over-year decline in revenue, operating margin, and EPS, contributing to a negative sentiment for the stock.
2. Ongoing strategic reduction of Amazon volume and network reconfiguration.
UPS has continued its strategy of reducing its reliance on Amazon's volume, having decreased non-lucrative Amazon package volume by an average of 500,000 pieces per day in Q1 2026, following a reduction of approximately 1 million pieces per day in Q4 2025. This is part of a broader "network reconfiguration" and cost-cutting initiative that included closing 23 additional buildings in Q1 2026, with plans to close 27 more this year, and a long-term goal of closing at least 200 facilities through 2028. While this move is intended to improve long-term profitability by focusing on higher-margin business, it has contributed to a decline in total U.S. average daily volume.
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Stock Movement Drivers
Fundamental Drivers
The -6.4% change in UPS stock from 1/31/2026 to 5/5/2026 was primarily driven by a -7.5% change in the company's P/E Multiple.| (LTM values as of) | 1312026 | 5052026 | Change |
|---|---|---|---|
| Stock Price ($) | 104.76 | 98.07 | -6.4% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 89,483 | 88,661 | -0.9% |
| Net Income Margin (%) | 6.1% | 6.3% | 2.2% |
| P/E Multiple | 16.1 | 14.9 | -7.5% |
| Shares Outstanding (Mil) | 848 | 849 | -0.1% |
| Cumulative Contribution | -6.4% |
Market Drivers
1/31/2026 to 5/5/2026| Return | Correlation | |
|---|---|---|
| UPS | -6.4% | |
| Market (SPY) | 3.6% | 42.0% |
| Sector (XLI) | 4.5% | 54.7% |
Fundamental Drivers
The 4.9% change in UPS stock from 10/31/2025 to 5/5/2026 was primarily driven by a 8.2% change in the company's P/E Multiple.| (LTM values as of) | 10312025 | 5052026 | Change |
|---|---|---|---|
| Stock Price ($) | 93.47 | 98.07 | 4.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 90,313 | 88,661 | -1.8% |
| Net Income Margin (%) | 6.3% | 6.3% | -0.9% |
| P/E Multiple | 13.8 | 14.9 | 8.2% |
| Shares Outstanding (Mil) | 847 | 849 | -0.2% |
| Cumulative Contribution | 4.9% |
Market Drivers
10/31/2025 to 5/5/2026| Return | Correlation | |
|---|---|---|
| UPS | 4.9% | |
| Market (SPY) | 5.5% | 32.2% |
| Sector (XLI) | 11.9% | 50.9% |
Fundamental Drivers
The 9.9% change in UPS stock from 4/30/2025 to 5/5/2026 was primarily driven by a 13.7% change in the company's P/E Multiple.| (LTM values as of) | 4302025 | 5052026 | Change |
|---|---|---|---|
| Stock Price ($) | 89.20 | 98.07 | 9.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 91,070 | 88,661 | -2.6% |
| Net Income Margin (%) | 6.3% | 6.3% | -1.0% |
| P/E Multiple | 13.1 | 14.9 | 13.7% |
| Shares Outstanding (Mil) | 852 | 849 | 0.4% |
| Cumulative Contribution | 9.9% |
Market Drivers
4/30/2025 to 5/5/2026| Return | Correlation | |
|---|---|---|
| UPS | 9.9% | |
| Market (SPY) | 30.4% | 40.0% |
| Sector (XLI) | 33.2% | 48.9% |
Fundamental Drivers
The -36.1% change in UPS stock from 4/30/2023 to 5/5/2026 was primarily driven by a -45.4% change in the company's Net Income Margin (%).| (LTM values as of) | 4302023 | 5052026 | Change |
|---|---|---|---|
| Stock Price ($) | 153.58 | 98.07 | -36.1% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 100,338 | 88,661 | -11.6% |
| Net Income Margin (%) | 11.5% | 6.3% | -45.4% |
| P/E Multiple | 11.5 | 14.9 | 29.9% |
| Shares Outstanding (Mil) | 865 | 849 | 1.9% |
| Cumulative Contribution | -36.1% |
Market Drivers
4/30/2023 to 5/5/2026| Return | Correlation | |
|---|---|---|
| UPS | -36.1% | |
| Market (SPY) | 78.7% | 41.9% |
| Sector (XLI) | 80.3% | 48.6% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| UPS Return | 30% | -15% | -6% | -16% | -16% | -2% | -28% |
| Peers Return | 39% | -20% | 26% | -0% | 21% | 13% | 90% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 5% | 92% |
Monthly Win Rates [3] | |||||||
| UPS Win Rate | 58% | 67% | 50% | 33% | 58% | 60% | |
| Peers Win Rate | 62% | 42% | 58% | 52% | 67% | 52% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 40% | |
Max Drawdowns [4] | |||||||
| UPS Max Drawdown | -8% | -24% | -20% | -20% | -31% | -3% | |
| Peers Max Drawdown | -7% | -31% | -4% | -16% | -21% | -1% | |
| S&P 500 Max Drawdown | -1% | -25% | -1% | -2% | -15% | -7% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: FDX, ODFL, CHRW, EXPD, JBHT. See UPS Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 5/5/2026 (YTD)
How Low Can It Go
| Event | UPS | S&P 500 |
|---|---|---|
| 2025 US Tariff Shock | ||
| % Loss | -20.1% | -18.8% |
| % Gain to Breakeven | 25.1% | 23.1% |
| Time to Breakeven | 289 days | 79 days |
| 2020 COVID-19 Crash | ||
| % Loss | -18.5% | -33.7% |
| % Gain to Breakeven | 22.7% | 50.9% |
| Time to Breakeven | 85 days | 140 days |
| Q4 2018 Fed Policy Error / Growth Scare | ||
| % Loss | -23.0% | -19.2% |
| % Gain to Breakeven | 29.9% | 23.7% |
| Time to Breakeven | 213 days | 105 days |
| 2015-2016 China Devaluation / Global Growth Scare | ||
| % Loss | -13.2% | -12.2% |
| % Gain to Breakeven | 15.2% | 13.9% |
| Time to Breakeven | 55 days | 62 days |
| 2011 US Debt Ceiling Crisis & European Contagion | ||
| % Loss | -16.4% | -17.9% |
| % Gain to Breakeven | 19.6% | 21.8% |
| Time to Breakeven | 119 days | 123 days |
| 2010 Eurozone Sovereign Debt Crisis / Flash Crash | ||
| % Loss | -16.6% | -15.4% |
| % Gain to Breakeven | 19.9% | 18.2% |
| Time to Breakeven | 63 days | 125 days |
In The Past
United Parcel Service's stock fell -20.1% during the 2025 US Tariff Shock. Such a loss loss requires a 25.1% gain to breakeven.
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Asset Allocation
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| Event | UPS | S&P 500 |
|---|---|---|
| 2025 US Tariff Shock | ||
| % Loss | -20.1% | -18.8% |
| % Gain to Breakeven | 25.1% | 23.1% |
| Time to Breakeven | 289 days | 79 days |
| Q4 2018 Fed Policy Error / Growth Scare | ||
| % Loss | -23.0% | -19.2% |
| % Gain to Breakeven | 29.9% | 23.7% |
| Time to Breakeven | 213 days | 105 days |
| 2008-2009 Global Financial Crisis | ||
| % Loss | -45.6% | -53.4% |
| % Gain to Breakeven | 83.8% | 114.4% |
| Time to Breakeven | 402 days | 1085 days |
In The Past
United Parcel Service's stock fell -20.1% during the 2025 US Tariff Shock. Such a loss loss requires a 25.1% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
About United Parcel Service (UPS)
AI Analysis | Feedback
Here are a few analogies for United Parcel Service (UPS):
- Like FedEx.
- The private, global equivalent of the U.S. Postal Service.
- Imagine the Amazon delivery system, but for any company or individual worldwide.
AI Analysis | Feedback
```html- Package Delivery Services: Provides time-definite delivery of letters, documents, small packages, and palletized freight through air and ground services, both domestically and internationally.
- Freight Forwarding: Offers international air and ocean freight forwarding services.
- Customs Brokerage: Assists clients with customs clearance and compliance for international shipments.
- Logistics and Distribution Solutions: Includes distribution, post-sales support, and specialized supply chain solutions for industries such as healthcare.
- Truckload Brokerage: Arranges full truckload transportation services for businesses.
- Technology Solutions: Develops and provides shipping, visibility, and billing technologies to enhance logistics management.
- Financial and Insurance Services: Offers financial and insurance products related to its transportation and logistics operations.
- Consulting Services: Provides expert advice on logistics and supply chain optimization.
AI Analysis | Feedback
United Parcel Service (UPS) primarily sells its services to other companies (Business-to-Business or B2B) rather than individuals. Due to the vast and diverse nature of its customer base, spanning virtually all industries globally, UPS does not publicly disclose the names of its individual major customer companies. Its services are integral to the supply chains of countless businesses worldwide.
However, the major categories of companies that rely heavily on UPS for their operations include:
- E-commerce Businesses and Retailers: Companies of all sizes, from large online marketplaces to small direct-to-consumer brands, use UPS for shipping products to their customers (both domestically and internationally).
- Manufacturers and Distributors: Businesses across various sectors (e.g., automotive, electronics, consumer goods, industrial products) utilize UPS for transporting raw materials, components, finished goods, and managing complex supply chains.
- Healthcare and Life Sciences Companies: As explicitly mentioned in the company description, this sector relies on UPS for specialized logistics, including temperature-controlled shipping, urgent deliveries, and compliance with strict regulations for pharmaceuticals, medical devices, and other sensitive materials.
- Small and Medium-sized Businesses (SMBs): A broad array of SMBs across virtually every industry use UPS for their shipping needs, from documents and small packages to freight services.
While individuals do use UPS for personal shipping (Consumer-to-Consumer or C2C) and returning items to businesses, the core of UPS's revenue and operational focus lies in serving the complex logistics and shipping requirements of other businesses.
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Carol Tomé, Chief Executive Officer
Carol Tomé has served as the Chief Executive Officer of UPS since June 2020, making her the first female CEO and the first external hire for the role in the company's history, although she had been a member of the Board since 2003. Before joining UPS, Ms. Tomé spent nearly two decades as the Executive Vice President and Chief Financial Officer of The Home Depot, from 1995 to 2019. During her tenure at The Home Depot, she was instrumental in guiding the company through the financial recession and housing crisis, doubling sales to over $108 billion, and achieving a 450% increase in shareholder value. Her early career included roles as a commercial lender at United Bank of Denver (now Wells Fargo) and leadership positions at Johns-Manville Corporation and Riverwood International Corporation.
Brian Dykes, Executive Vice President and Chief Financial Officer
Brian Dykes was appointed Executive Vice President and Chief Financial Officer of UPS in July 2024. He is a veteran of UPS with 25 years of service, having held various senior roles within the company's finance and accounting, corporate treasury, mergers and acquisitions, business intelligence, and business development functions, both in the United States and internationally. Prior to his current role, he served as Senior Vice President, Global Finance and Planning since April 2023.
Nando Cesarone, Executive Vice President and President U.S.
Nando Cesarone serves as the Executive Vice President and President U.S. for UPS, where he is responsible for overseeing the company's U.S. small package, transportation, and airline operations. He began his career at UPS in 1990 as a preloader, benefiting from the company's tuition reimbursement program, and later became a package car driver. His extensive international experience with UPS includes serving as President of UPS International, President of UPS Europe, and President of the Asia Pacific Region, where he led expansion efforts in emerging markets and China.
Kate Gutmann, Executive Vice President & President International, Healthcare and Supply Chain Solutions
Kate Gutmann holds the position of Executive Vice President & President International, Healthcare and Supply Chain Solutions at UPS. She is responsible for global sales, solutions, and customer engagement strategies, and also oversees the UPS Capital and The UPS Store business units worldwide. Ms. Gutmann started her career with UPS in 1989 as a marketing intern while studying at Siena College. She has progressed through numerous sales and marketing roles with increasing responsibility, including President of Worldwide Sales and Vice President of Marketing for the UPS Europe, Middle East, and Africa Region.
Bala Subramanian, Executive Vice President & Chief Digital and Technology Officer
Bala Subramanian is the Executive Vice President & Chief Digital and Technology Officer at UPS. He joined the company in 2020, bringing significant expertise in digital transformation, technology innovation, and strategic leadership. His career prior to UPS included various leadership roles with several major corporations.
AI Analysis | Feedback
The key risks to United Parcel Service (UPS) include intense competition and shifts in the e-commerce landscape, labor costs and union relations, and fuel price volatility and rising operating expenses.
Competitive Landscape and E-commerce Shifts
UPS operates in a highly competitive industry with established rivals such as FedEx, DHL Express, and national postal services. A significant and evolving threat comes from Amazon Logistics, which has been rapidly expanding its sorting and distribution capabilities and handling a growing portion of its own package deliveries, with the potential to offer third-party services in the future. This intense competition necessitates continuous investment in network efficiency, technological innovation, and service diversification to maintain market share. In response to these shifts, UPS has been strategically reducing its reliance on Amazon's package volume and pivoting towards higher-margin segments like small and medium-sized businesses (SMBs) and healthcare logistics.
Labor Costs and Union Relations
UPS has a large, unionized workforce, primarily represented by the Teamsters. Labor costs are a significant challenge, with recent collective bargaining agreements leading to substantial increases in expenses. The company has faced and continues to navigate potential labor disputes, including strike threats, which can lead to operational disruptions and increased costs. Efforts by UPS to reduce its workforce through voluntary buyout plans, aimed at improving profitability and aligning staffing with reduced package volumes (particularly from Amazon), have also created tension and disputes with the union, which views these actions as potential violations of existing contracts.
Fuel Price Volatility and Operating Expenses
As a transportation and logistics company operating a large fleet of vehicles and aircraft, UPS is highly sensitive to fluctuations in fuel prices. While UPS implements fuel surcharges to offset these costs, significant or sustained increases in diesel and jet fuel prices directly impact operating expenses. These increased costs can put pressure on profitability and may necessitate passing on higher shipping costs to customers, potentially affecting demand for UPS's services. Beyond fuel, rising operating expenses generally, including compensation and benefits, also contribute to financial pressures.
AI Analysis | Feedback
The clear emerging threat for United Parcel Service (UPS) is the continued and extensive expansion of major e-commerce retailers, particularly Amazon, into developing and operating their own in-house logistics and delivery networks. Amazon, a significant former customer of UPS, has heavily invested in its own fleet of aircraft, trucks, vans, and last-mile delivery services, effectively internalizing a substantial volume of packages that were previously handled by traditional carriers like UPS. This trend represents a direct competitive challenge, as a major source of parcel volume is diverted to an internal network, significantly altering the competitive landscape and putting pressure on UPS's package delivery segments by removing a large customer and establishing a formidable new competitor.
AI Analysis | Feedback
United Parcel Service (UPS) operates in several large addressable markets for its main products and services:
- Global Courier, Express, and Parcel (CEP) Market: This market, which includes both domestic and international package delivery, was valued at approximately USD 956.19 billion in 2025. It is projected to grow significantly, reaching an estimated USD 2,976.01 billion by 2033.
- U.S. Domestic Parcel Market: For its U.S. domestic package delivery services, the market generated USD 196 billion in revenue in 2025.
- Global Freight Forwarding Market: The global freight forwarding market, encompassing international air and ocean freight forwarding, was valued at USD 230.68 billion in 2025. This market is projected to grow to approximately USD 365.15 billion by 2035.
- Global Third-Party Logistics (3PL) Market: This broad market, covering services such as international air and ocean freight forwarding, customs brokerage, distribution and post-sales, and truckload brokerage, was valued at USD 1.6 trillion in 2025. The 3PL market is expected to expand to USD 4.3 trillion by 2035.
- Global Healthcare Third-Party Logistics Market: For its specialized supply chain solutions to the healthcare and life sciences industry, the global healthcare third-party logistics market was estimated at USD 261.39 billion in 2024. This specific segment is projected to grow to USD 406.36 billion by 2030.
AI Analysis | Feedback
United Parcel Service (UPS) is strategically positioning itself for future revenue growth over the next 2-3 years by focusing on several key drivers:
- Expansion in Higher-Margin Markets: UPS is prioritizing growth in premium segments such as healthcare logistics and small and medium-sized businesses (SMBs/SMEs). This involves reducing lower-margin volume, for instance, by significantly decreasing its shipments for a major customer like Amazon, to concentrate on more profitable package types. The company aims to become the world's leading provider of complex healthcare logistics and has demonstrated strong growth in this area, targeting $20 billion in healthcare revenue by 2026.
- Network Optimization and Automation: Under its "Network of the Future" initiative, UPS is investing heavily in optimizing and automating its core integrated network. This strategy is designed to lower the cost to serve, enhance efficiency, and support anticipated volume growth. Plans include more than tripling the number of automated buildings in its network by the end of 2028, largely through implementing automation projects in existing facilities, and reconfiguring its U.S. network to yield substantial savings.
- Improved Revenue Quality and Strategic Pricing: UPS is focused on driving higher revenue per piece by implementing average rate increases across its ground, air, and international services. This emphasis on "revenue quality" is a core part of its strategy, which includes adjusting customer volume to focus on more profitable package types and insourcing services like SurePost to improve efficiency and control over final-mile delivery.
- International Market Expansion: The company continues to target growth in high-growth international markets. This involves efficiently connecting domestic and export customers to its global network, leveraging its established presence in over 200 countries and territories.
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Share Repurchases
- In January 2023, UPS approved a new share repurchase authorization for $5.0 billion of Class A and Class B common stock, replacing a previous 2021 authorization.
- UPS repurchased $2.2 billion in shares in 2023, $500 million in 2024, and $1 billion in 2025.
- As of December 31, 2024, $2.3 billion remained available under the 2023 share repurchase authorization.
Outbound Investments
- UPS acquired Frigo-Trans in January 2025 and Andlauer Healthcare Group (AHG) in November 2025, with recent strategic mergers and acquisitions focusing on healthcare logistics.
- The company sold Coyote in the third quarter of 2024.
Capital Expenditures
- Capital expenditures were $4.194 billion in 2021, $4.769 billion in 2022, $5.158 billion in 2023, $3.909 billion in 2024, and $3.685 billion in 2025.
- Expected capital expenditures for 2026 are approximately $3.0 billion, marking a 10-year low.
- The primary focus of capital expenditures includes network reconfiguration, automation investments, and capacity rightsizing, emphasizing a leaner, more productive network.
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Trade Ideas
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| Date | Ticker | Company | Category | Trade Strategy | 6M Fwd Rtn | 12M Fwd Rtn | 12M Max DD |
|---|---|---|---|---|---|---|---|
| 04302026 | GEO | GEO | Dip Buy | DB | P/E OPMDip Buy with Low PE and High MarginBuying dips for companies with tame PE and meaningfully high operating margin | 0.0% | 0.0% | 0.0% |
| 04302026 | RUN | Sunrun | Special | Short Squeeze PotentialShort Squeeze PotentialHas potential for a short squeeze. High short interest, rising short interest and high debt. | 0.0% | 0.0% | 0.0% |
| 04172026 | RSG | Republic Services | Monopoly | MY | Getting CheaperMonopoly-Like with P/S DeclineLarge cap with monopoly-like margins or cash flow generation and getting cheaper based on P/S multiple | 0.8% | 0.8% | -1.1% |
| 04102026 | VRSK | Verisk Analytics | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 12.3% | 12.3% | 0.0% |
| 04102026 | UHAL | U-Haul | Monopoly | MY | Getting CheaperMonopoly-Like with P/S DeclineLarge cap with monopoly-like margins or cash flow generation and getting cheaper based on P/S multiple | 0.3% | 0.3% | -1.0% |
| 08312025 | UPS | United Parcel Service | Insider | Insider Buys 45DStrong Insider BuyingCompanies with multiple insider buys in the last 45 days | 36.8% | 28.4% | -5.6% |
| 10312023 | UPS | United Parcel Service | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 6.8% | -0.8% | -9.7% |
Research & Analysis
Invest in Strategies
Wealth Management
Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 181.61 |
| Mkt Cap | 32.0 |
| Rev LTM | 14,167 |
| Op Inc LTM | 1,207 |
| FCF LTM | 994 |
| FCF 3Y Avg | 884 |
| CFO LTM | 1,499 |
| CFO 3Y Avg | 1,562 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | -1.0% |
| Rev Chg 3Y Avg | -5.0% |
| Rev Chg Q | -2.0% |
| QoQ Delta Rev Chg LTM | -0.5% |
| Op Inc Chg LTM | 4.4% |
| Op Inc Chg 3Y Avg | -9.7% |
| Op Mgn LTM | 8.1% |
| Op Mgn 3Y Avg | 8.3% |
| QoQ Delta Op Mgn LTM | -0.1% |
| CFO/Rev LTM | 9.3% |
| CFO/Rev 3Y Avg | 10.0% |
| FCF/Rev LTM | 6.9% |
| FCF/Rev 3Y Avg | 5.2% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 32.0 |
| P/S | 1.5 |
| P/Op Inc | 22.4 |
| P/EBIT | 22.4 |
| P/E | 29.4 |
| P/CFO | 17.3 |
| Total Yield | 4.7% |
| Dividend Yield | 1.3% |
| FCF Yield 3Y Avg | 4.6% |
| D/E | 0.1 |
| Net D/E | 0.1 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 0.1% |
| 3M Rtn | -1.3% |
| 6M Rtn | 26.3% |
| 12M Rtn | 54.8% |
| 3Y Rtn | 37.3% |
| 1M Excs Rtn | -8.8% |
| 3M Excs Rtn | -6.2% |
| 6M Excs Rtn | 27.0% |
| 12M Excs Rtn | 25.5% |
| 3Y Excs Rtn | -33.0% |
Comparison Analyses
Price Behavior
| Market Price | $98.07 | |
| Market Cap ($ Bil) | 83.3 | |
| First Trading Date | 11/10/1999 | |
| Distance from 52W High | -17.1% | |
| 50 Days | 200 Days | |
| DMA Price | $102.91 | $95.67 |
| DMA Trend | indeterminate | down |
| Distance from DMA | -4.7% | 2.5% |
| 3M | 1YR | |
| Volatility | 34.5% | 29.7% |
| Downside Capture | 0.60 | 0.58 |
| Upside Capture | 33.77 | 88.55 |
| Correlation (SPY) | 31.0% | 36.8% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 0.77 | 0.91 | 0.72 | 0.63 | 0.88 | 0.76 |
| Up Beta | 1.08 | 1.19 | 0.96 | 0.60 | 0.89 | 0.79 |
| Down Beta | 1.03 | 1.39 | 1.64 | 0.89 | 0.81 | 0.60 |
| Up Capture | 78% | 37% | 46% | 66% | 80% | 34% |
| Bmk +ve Days | 15 | 22 | 31 | 66 | 141 | 428 |
| Stock +ve Days | 16 | 22 | 36 | 69 | 133 | 375 |
| Down Capture | -171% | 102% | 31% | 47% | 96% | 100% |
| Bmk -ve Days | 4 | 18 | 30 | 56 | 108 | 321 |
| Stock -ve Days | 6 | 21 | 28 | 56 | 119 | 372 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with UPS | |
|---|---|---|---|---|
| UPS | 8.7% | 29.6% | 0.29 | - |
| Sector ETF (XLI) | 30.0% | 15.4% | 1.50 | 48.8% |
| Equity (SPY) | 27.8% | 12.5% | 1.73 | 39.8% |
| Gold (GLD) | 40.6% | 27.2% | 1.23 | -1.6% |
| Commodities (DBC) | 50.1% | 18.0% | 2.16 | -20.8% |
| Real Estate (VNQ) | 11.0% | 13.4% | 0.53 | 28.8% |
| Bitcoin (BTCUSD) | -17.3% | 42.2% | -0.34 | 6.9% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with UPS | |
|---|---|---|---|---|
| UPS | -9.2% | 28.3% | -0.32 | - |
| Sector ETF (XLI) | 12.8% | 17.4% | 0.58 | 56.3% |
| Equity (SPY) | 12.8% | 17.1% | 0.59 | 51.4% |
| Gold (GLD) | 20.2% | 17.9% | 0.92 | 3.6% |
| Commodities (DBC) | 14.0% | 19.1% | 0.60 | 10.3% |
| Real Estate (VNQ) | 3.4% | 18.8% | 0.09 | 44.9% |
| Bitcoin (BTCUSD) | 7.9% | 56.2% | 0.35 | 9.9% |
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Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with UPS | |
|---|---|---|---|---|
| UPS | 3.1% | 27.4% | 0.15 | - |
| Sector ETF (XLI) | 13.8% | 19.9% | 0.61 | 57.9% |
| Equity (SPY) | 14.9% | 17.9% | 0.71 | 56.1% |
| Gold (GLD) | 13.4% | 15.9% | 0.70 | -0.0% |
| Commodities (DBC) | 9.6% | 17.7% | 0.45 | 15.7% |
| Real Estate (VNQ) | 5.6% | 20.7% | 0.23 | 44.1% |
| Bitcoin (BTCUSD) | 67.4% | 66.9% | 1.06 | 7.0% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Expand for More| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 4/28/2026 | -4.0% | -11.0% | |
| 1/27/2026 | 0.2% | 3.1% | 7.9% |
| 10/28/2025 | 8.0% | 5.5% | 7.8% |
| 7/29/2025 | -10.6% | -16.3% | -12.3% |
| 4/29/2025 | -0.4% | -1.6% | 1.3% |
| 1/30/2025 | -14.1% | -16.4% | -9.8% |
| 10/24/2024 | 5.3% | 1.8% | 1.2% |
| 7/23/2024 | -12.1% | -11.4% | -10.1% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 10 | 12 | 15 |
| # Negative | 14 | 12 | 8 |
| Median Positive | 6.1% | 4.3% | 4.7% |
| Median Negative | -6.5% | -7.8% | -9.9% |
| Max Positive | 14.4% | 20.7% | 30.4% |
| Max Negative | -14.1% | -16.4% | -12.5% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 12/31/2025 | 02/17/2026 | 10-K |
| 09/30/2025 | 11/05/2025 | 10-Q |
| 06/30/2025 | 08/06/2025 | 10-Q |
| 03/31/2025 | 05/07/2025 | 10-Q |
| 12/31/2024 | 02/18/2025 | 10-K |
| 09/30/2024 | 11/06/2024 | 10-Q |
| 06/30/2024 | 08/07/2024 | 10-Q |
| 03/31/2024 | 05/03/2024 | 10-Q |
| 12/31/2023 | 02/20/2024 | 10-K |
| 09/30/2023 | 11/01/2023 | 10-Q |
| 06/30/2023 | 08/08/2023 | 10-Q |
| 03/31/2023 | 05/03/2023 | 10-Q |
| 12/31/2022 | 02/21/2023 | 10-K |
| 09/30/2022 | 11/02/2022 | 10-Q |
| 06/30/2022 | 08/03/2022 | 10-Q |
| 03/31/2022 | 05/04/2022 | 10-Q |
Recent Forward Guidance [BETA]
Latest: Q1 2026 Earnings Reported 4/28/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Revenue | 89.70 Bil | 0 | 0 | Affirmed | Guidance: 89.70 Bil for 2026 | ||
| 2026 Operating Margin | 9.6% | 0 | 0 | Affirmed | Guidance: 9.6% for 2026 | ||
| 2026 Capital Expenditures | 3.00 Bil | 0 | Affirmed | Guidance: 3.00 Bil for 2026 | |||
| 2026 Dividends | 5.40 Bil | 0 | Affirmed | Guidance: 5.40 Bil for 2026 | |||
| 2026 Program Cost Savings | 3.00 Bil | 0 | Affirmed | Guidance: 3.00 Bil for 2026 | |||
| 2026 Effective Tax Rate | 23.0% | Higher New | |||||
| 2026 Non-GAAP Adjusted Operating Expense Exclusions | 1.30 Bil | 1.40 Bil | 1.50 Bil | Higher New | |||
Prior: Q4 2025 Earnings Reported 1/27/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| 2026 Revenue | 89.70 Bil | ||||||
| 2026 Operating Margin | 9.6% | ||||||
| 2026 Capital Expenditures | 3.00 Bil | -14.3% | Lowered | Guidance: 3.50 Bil for 2025 | |||
| 2026 Dividends | 5.40 Bil | -1.8% | Lowered | Guidance: 5.50 Bil for 2025 | |||
| 2026 Cost Savings | 3.00 Bil | ||||||
Insider Activity
Expand for More| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Brothers, Norman M JR | Chief Legal & Compliance Off | Direct | Sell | 1282026 | 106.15 | 25,014 | Form | ||
| 2 | Shi, Christiana Smith | Direct | Buy | 8262025 | 88.17 | 500 | 44,084 | 44,084 | Form | |
| 3 | Tome, Carol B | Chief Executive Officer | Direct | Buy | 8012025 | 85.67 | 11,682 | 1,000,816 | 2,117,631 | Form |
| 4 | Johnson, William R | Direct | Buy | 8012025 | 86.50 | 5,000 | 432,477 | 878,793 | Form |
UPS Trade Sentinel
ACCUMULATE (Score 7-8)
CONVICTION RATIONALE
UPS scores a 7, warranting an 'ACCUMULATE' rating. The investment thesis rests on a well-defined, albeit complex, operational turnaround that offers a favorable risk/reward skew. The valuation is cheap, providing a margin of safety against the clear execution risks. The competitive moat in the company's targeted, high-value segments is stable and defensible. While near-term results are noisy due to the strategic transition, the potential for significant margin expansion and a subsequent re-rating makes this an attractive opportunity for patient, data-driven investors. We will accumulate a position, buying on any weakness related to macro noise rather than thesis-breaking execution failures.
STOCK ARCHETYPE
Type F: 'Transition / Profit Pivot'UPS fits the 'Transition' archetype as it is a mature, stalwart business undergoing a significant, deliberate strategic shift. Under CEO Carol Tomé, the 'Better, Not Bigger' strategy is pivoting the company away from maximizing low-margin volume (e.g., Amazon) towards maximizing profitability through higher-yield segments like Healthcare and SMBs, coupled with a major $3 billion cost-cutting initiative. Current financials reflect this transition, with top-line pressure and temporary margin compression, making the core investment debate about the execution of this pivot to drive future FCF and margin expansion, not about pure growth.
INVESTMENT THESIS
The primary long thesis is that UPS will successfully execute its strategic pivot, leading to significant operating margin expansion in its core U.S. Domestic segment. This will be achieved by successfully replacing shed, low-margin Amazon volume with higher-revenue-quality shipments from the Small-to-Medium Business (SMB) and Healthcare sectors, while simultaneously realizing $3 billion in cost efficiencies from its 'Network of the Future' plan.
- Record SMB Penetration: U.S. SMBs now account for a record 34.5% of total volume, demonstrating traction in acquiring higher-yield customers.
- Strong Pricing Power: Despite an 8% decline in U.S. daily volume, revenue per piece grew a strong 6.5% in Q1 2026, confirming the shift to a higher-value mix.
- Healthcare Logistics Growth: UPS is targeting to double its high-margin healthcare revenue to $20 billion by 2026 in a market growing at a 10.4% CAGR.
- Defined Cost-Out Program: Management has a clear target of cutting $3 billion in costs in 2026 through network consolidation and efficiency measures.
PRIMARY RISK
The primary risk is a failure to execute the complex 'Better, not Bigger' transition, resulting in prolonged margin compression. This 'self-inflicted' risk would manifest if the high-margin SMB and Healthcare volume fails to materialize fast enough to offset the fixed-cost deleverage from shedding Amazon's volume, while the $3B cost-saving plan encounters delays or unforeseen expenses.
- Severe Q1 Margin Compression: The U.S. Domestic adjusted operating margin fell to 4.0% in Q1 2026, absorbing $350 million in transitional costs, highlighting the financial strain of the pivot.
- High Execution Hurdle: The plan involves closing over 50 buildings in 2026 and a major customer mix shift, creating significant operational complexity and risk of disruption.
| KPI | Threshold | Rationale |
|---|---|---|
| U.S. Domestic Adjusted Operating Margin | >8.0% | This is the single most important KPI. It is the direct measure of success for the 'Better, not Bigger' strategy. A sequential rebound from the 4.0% Q1 level is non-negotiable for the thesis to work. |
| U.S. SMBs as % of Total Volume | >35.0% | Directly measures the progress of replacing low-quality volume with high-quality, higher-margin customers. Continued growth from the current record of 34.5% is essential. |
| Revenue per Piece vs. Average Daily Volume | Positive Spread (Rev/Piece Growth > Volume Decline) | This validates the 'revenue quality' concept. As long as the growth in price/mix is more than offsetting the planned decline in volume, the strategy is mathematically sound. |
The 'Better, Not Bigger' Execution
BULL VIEW
The strategy is working: record SMB penetration (34.5%) and strong revenue-per-piece growth (+6.5%) prove high-quality revenue is replacing low-quality volume, leading to margin recovery.
CORE TENSION
Can UPS replace shed Amazon volume with enough high-margin SMB/Healthcare business to drive margin expansion, or will fixed-cost deleverage overwhelm the pivot?
PREVAILING SENTIMENT
The U.S. Domestic adjusted operating margin fell to 4.0% in Q1 2026, absorbing $350 million in transitional costs, which currently gives the Bear Stance the lead.
BEAR VIEW
The severe Q1 margin compression (4.0%) shows the pivot is too costly and slow. The company is losing volume faster than it can find profitable replacements, breaking the thesis.
| Timeline | Event & Metric To Watch |
|---|---|
Late July 2026 | Q2 2026 Earnings Call Watch: U.S. Domestic Adjusted Operating Margin must show sequential rebound from the 4.0% reported in Q1. A failure to reach >7.0% would be a major negative signal. |
Late October 2026 | Q3 2026 Earnings Call Watch: U.S. SMBs as % of Total Volume. Watch for continued growth beyond the 34.5% baseline from Q1, demonstrating sustained traction in acquiring higher-yield customers. |
Post June 1, 2026 Spinoff | FedEx Freight's First Standalone Report Watch: Commentary on LTL market share and pricing strategy. Aggressive, price-led share gain rhetoric would signal a more competitive environment for UPS. |
Next 3-6 Months | Autonomous Trucking Commercialization Update Watch: Headline announcing a major partnership between a developer (e.g., Aurora, Waabi) and a large shipper or rival carrier for driver-out commercial routes. |
| Date | Event | Stock Impact |
|---|---|---|
Jun 1, 2026 | Strategic Win from Competitor Details: FedEx Freight is set to spin-off into a publicly traded company on June 1, 2026. This is a strategic event impacting the competitive landscape for UPS's LTL business. | N/A (Forward-looking) $0.00 -> $0.00 |
Nov 1, 2024 | SEC Settlement Details: UPS paid a $45 million penalty to the SEC to settle charges of misrepresenting earnings related to its UPS Freight business unit in 2019 and 2020. | N/A (Priced-in) $0.00 -> $0.00 |
Oct 28, 2025 | Q3 2025 Earnings Report Details: UPS reported a significant earnings beat with EPS of $1.74, well above the analyst estimate of $1.31, signaling strong pricing power during peak season preparations. | Surged +8.00% $86.48 -> $93.41 |
Dec 1, 2025 | NY AG Lawsuit Filed Details: The New York Attorney General filed a lawsuit against UPS alleging widespread wage theft of seasonal workers. The financial impact remains unquantified. | Muted (-0.60%) $94.47 -> $93.91 |
Jan 27, 2026 | Q4 2025 Earnings Report Details: UPS reported EPS of $2.38, beating the consensus estimate of $2.20. Revenue fell 3.2% YoY to $24.48 billion but still topped expectations. | Fell notably by -3.06% $105.49 -> $102.27 |
Apr 28, 2026 | Q1 2026 Earnings Report Details: Revenue of $21.2B beat estimates, but EPS of $1.07 missed. U.S. Domestic adjusted operating margin compressed to 4.0%, causing concern despite reaffirmed FY26 guidance. | Fell notably by -3.97% $108.24 -> $103.94 |
Position Sizing
4%-6%
NORMAL
Volatility is moderate. Sizing is capped at Normal due to the conflict between a 'CHEAP' valuation and 'BEARISH' sentiment driven by high execution risk. This is a deep value play.
Diversification Alternatives
CNI
SECTORUnlike UPS, CNI has a near-monopolistic rail network, providing a more durable moat and higher pricing power without the same level of complex operational transition risk.
DAL
SECTORWhile also cyclical, Delta's focus is on a post-pandemic travel recovery. It lacks the specific, self-inflicted execution risk of UPS's massive network and customer transition.
UPS is executing a strategic pivot from a volume-at-all-costs parcel carrier to a higher-margin logistics orchestrator, driven by shedding low-revenue-quality Amazon packages and aggressively expanding into profitable Healthcare and Small Business segments.
Filter all news through the 'Better, not Bigger' strategic lens: does this event improve revenue quality and expand operating margins, or does it represent a return to low-margin volume growth?
Growth in Healthcare logistics revenue >15% YoY; Small-to-Medium Business (SMB) mix reaching >35% of U.S. volume; evidence of the '$3B cost-out plan' yielding sequential margin improvement in the U.S. Domestic segment.
Stagnation or decline in SMB/Healthcare volumes; renewed high-volume, low-margin agreements with large enterprise shippers (e.g., Amazon); failure to meet quarterly margin expansion targets due to inability to offset fixed network costs after shedding Amazon volume.
Broad e-commerce growth/decline percentages (the mix of that volume is what matters); quarterly fluctuations in Amazon volume (the planned reduction is a multi-quarter process); minor changes to fuel surcharges (these are largely pass-through costs and don't affect core profitability).
Repricing Catalyst
The market is re-rating UPS based on the credibility of its 'Network of the Future' plan, which aims to cut $3 billion in costs by 2026. The catalyst is tangible evidence of margin expansion in the core U.S. Domestic segment in the second half of 2026 as the company proves it can successfully replace low-margin Amazon volume with higher-yield healthcare and SMB shipments.
U.S. Domestic Package Delivery
$56.4B TTM (66.5% of Total) · 4.0% MarginWhat It Is
Time-definite ground and air delivery of letters, documents, and packages for B2B, B2C, and C2C customers within the United States.
Who Pays & How
A diverse base of U.S. businesses and consumers pay for reliable, time-guaranteed delivery leveraging a vast, integrated air and ground network. Amazon is a key customer, but its revenue concentration is being actively reduced from 11.8% in 2023 to 8.8% in Q1 2026. Switching costs are high for integrated business customers.
Competition
International Package Delivery
$18.2B TTM (21.4% of Total) · 12.1% MarginWhat It Is
Time-definite express and standard delivery of packages and documents to over 200 countries and territories.
Who Pays & How
Global businesses pay for reliable, customs-cleared, cross-border delivery leveraging UPS's integrated global air and ground network, one of the world's largest cargo airlines.
Competition
Supply Chain & Freight Solutions
$10.1B TTM (12.0% of Total) · 8.1% MarginWhat It Is
A portfolio of services including freight forwarding, logistics and distribution, customs brokerage, and specialized healthcare logistics (UPS Premier). Includes digital services like Roadie and Happy Returns.
Who Pays & How
Large enterprises, particularly in the healthcare and industrial sectors, pay for complex, end-to-end supply chain management. For example, UPS aims to generate $20 billion in annual healthcare revenue by 2026 by managing critical logistics for pharmaceuticals and medical devices.
Competition
External Quote Links
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| MarketWatch | Unusual Whales |
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| FinViz |
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