Is UPS Stock An Opportunity Or Risk?

United Parcel Service (NYSE:UPS) has significantly underperformed the broader S&P 500 index over the past year, dropping nearly 30% compared to the S&P 500’s 12% gain. This decline comes despite UPS’  strategic shift to reduce the lower-margin Amazon deliveries, a move aimed at enhancing profitability. However, new tariffs could directly impact UPS by raising costs for customers and potentially reducing shipping volumes, particularly in international trade.

Despite these challenges, we believe UPS stock, currently priced around $98, presents an attractive buying opportunity. While there are valid concerns regarding the company’s operating performance and financial condition—which our analysis across growth, profitability, financial stability, and downturn resilience confirms as weak—we believe that these issues are already reflected in the stock’s very low valuation. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – Amid AI-Fueled Growth, AVGO Stock’s Valuation Raises Concern

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How Does United Parcel Service’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, UPS stock looks cheap compared to the broader market.

• United Parcel Service has a price-to-sales (P/S) ratio of 0.9 vs. a figure of 3.0 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 9.0 compared to 20.5 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 14.1 vs. the benchmark’s 26.4

How Have United Parcel Service’s Revenues Grown Over Recent Years?

United Parcel Service’s Revenues have declined marginally over recent years.

• United Parcel Service has seen its top line shrink at an average rate of 2.6% over the last 3 years (vs. increase of 5.5% for S&P 500)
• Its revenues have grown 1.3% from $90 Bil to $91 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues fell 0.7% to $22 Bil in the most recent quarter from $22 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is United Parcel Service?

United Parcel Service’s profit margins are much worse than most companies in the Trefis coverage universe.

• United Parcel Service’s Operating Income over the last four quarters was $8.5 Bil, which represents a poor Operating Margin of 9.4% (vs. 13.2% for S&P 500)
• United Parcel Service’s Operating Cash Flow (OCF) over this period was $9.1 Bil, pointing to a poor OCF Margin of 10.0% (vs. 14.9% for S&P 500)
• For the last four-quarter period, United Parcel Service’s Net Income was $5.9 Bil — indicating a poor Net Income Margin of 6.4% (vs. 11.6% for S&P 500)

Does United Parcel Service Look Financially Stable?

United Parcel Service’s balance sheet looks fine.

• United Parcel Service’s Debt figure was $26 Bil at the end of the most recent quarter, while its market capitalization is $84 Bil (as of 6/6/2025). This implies a moderate Debt-to-Equity Ratio of 31.1% (vs. 19.9% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $5.1 Bil of the $68 Bil in Total Assets for United Parcel Service.  This yields a moderate Cash-to-Assets Ratio of 7.4% (vs. 13.8% for S&P 500)

How Resilient Is UPS Stock During A Downturn?

UPS stock has seen an impact that was slightly better than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on UPS stock? Our dashboard How Low Can United Parcel Service Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

• UPS stock fell 41.9% from a high of $232.11 on 2 February 2022 to $134.83 on 27 October 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is 162.94 on 17 December 2023 and currently trades at around $98

COVID-19 Pandemic (2020)

• UPS stock fell 27.4% from a high of $118.61 on 16 January 2020 to $86.17 on 12 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 15 July 2020

Global Financial Crisis (2008)

• UPS stock fell 51.1% from a high of $78.37 on 8 August 2007 to $38.30 on 9 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 13 March 2012

Putting All The Pieces Together: What It Means For UPS Stock

In summary, United Parcel Service’s performance across the parameters detailed above are as follows:

• Growth: Neutral
• Profitability: Weak
• Financial Stability: Neutral
• Downturn Resilience: Good
• Overall: Neutral

UPS stock has performed moderately across the aforementioned parameters, and we believe the negative factors are largely already factored into the stock price. In fact, we estimate UPS’ Valuation to be $124 per share, reflecting over 25% upside potential.

While it seems there is some upside potential to UPS stock, the Trefis Reinforced Value (RV) Portfolio, has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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