Should You Buy Or Sell UPS Stock At $105?

January 9th, 2026 by Trefis Team

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UPS

United Parcel Service

UPS stock (NYSE:UPS) has jumped 8% in a week following Citigroup’s upgrade to a buy rating with a $126 price target. The company delivered better-than-expected Q3 2025 results last October, and positive spillover from FedEx’s strong performance has lifted sentiment across the transportation sector.

So, should you jump in now? We don’t think so.

Despite trading at what appears to be a discount to the S&P 500, UPS stock looks unattractive at its current price of around $105. Here’s why a cheap valuation doesn’t automatically make it a good buy. But before we delve into the specifics, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, see – What’s Next For XRP?

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Isn’t UPS Trading at a Discount?

Yes, by traditional metrics, UPS looks cheaper than the broader market:

Price-to-Sales: 1.0x vs. 3.3x for the S&P 500
Price-to-Free Cash Flow: 20.7x vs. 21.1x for the S&P 500
Price-to-Earnings: 16.5x vs. 23.7x for the S&P 500

But here’s the problem: a low valuation only matters if the underlying business justifies it. And when you look under the hood, UPS’s fundamentals tell a concerning story.

What’s Wrong with the Growth Picture?

The revenue trend is genuinely worrying:

Over the past 3 years, UPS’ revenues have contracted at an average rate of 3.9% annually while the S&P 500 grew 5.6%. That’s not just underperformance—that’s moving in the opposite direction.
Over the last 12 months, revenues declined 1.3% from $91 billion to $89 billion. The S&P 500? Up 6.2%.
Most recently, Q3 2025 revenues fell 3.7% year-over-year to $21 billion. Again, the S&P 500 grew 7.3%.

Can a company command even a “cheap” valuation when it’s been shrinking for three consecutive years? The market is telling you something here.

But What About Profitability—Isn’t That Improving?

This is where things get really problematic. Despite management’s focus on improving profitability, the margins remain weak:

Operating margin of 9.2% is less than half the S&P 500’s 18.8%. For a company that’s been around for over a century and operates in a concentrated industry, this is surprisingly poor.
Operating cash flow margin of 9.5% trails the S&P 500’s 20.5% by a significant margin.
Net income margin of 6.1% versus 13.1% for the S&P 500 means UPS is keeping just 6 cents of every dollar in sales.

Here’s the question: if profitability was supposed to be improving through the company’s restructuring efforts, why are these margins still so weak? Cost-cutting can only take you so far when your top line is shrinking.

At Least the Balance Sheet is Solid

Actually, yes. This is one bright spot:

UPS has a debt-to-equity ratio of 32.2% compared to 20.4% for the S&P 500, which is reasonably strong.
The company holds $6.8 billion in cash against $71 billion in total assets—a moderate cash-to-assets ratio of 9.6%.

So financial stability isn’t the concern here. The company isn’t at risk of a balance sheet crisis. But a strong balance sheet doesn’t make a stock a good investment if the operational trajectory is headed the wrong way.

How Has UPS Performed During Market Stress?

The downturn resilience is mixed:

During the 2022 inflation shock, UPS fell 41.9% from its February 2022 high of $232 to $135 in October 2023. That’s worse than the S&P 500’s 25.4% decline. And here’s the kicker: the stock still hasn’t recovered to those levels. It peaked at $163 in December 2023 and now sits at $105.
During COVID in 2020, UPS held up better, falling 27.4% compared to the S&P 500’s 33.9% drop, and recovered relatively quickly. Remember, people ordered more stuff at home rather than venturing out, and it went well for logistics companies.
During the 2008 financial crisis, UPS fell 51.1% versus 56.8% for the S&P 500, taking until 2012 to fully recover.

What does this tell us? UPS can weather storms, but its recovery from the most recent downturn has been notably weak—and that’s happening while the S&P 500 has made new highs. Look at our dashboard – With United Parcel Service Stock Surging, Have You Considered The Downside? – for more details.

So What’s the Bottom Line?

Let’s put it all together:

Growth: Very weak—three years of revenue contraction
Profitability: Weak—margins well below market averages despite cost-cutting
Financial Stability: Strong—solid balance sheet
Downturn Resilience: Moderate—but struggling to recover from 2022 lows
The verdict? Overall: Weak.

Yes, the stock trades at a discount to the market. But that discount exists for a reason. The business is shrinking, profit margins are poor, and the stock hasn’t participated in the broader market recovery since 2022.

What Would Need to Change?

Could we be wrong? Absolutely. If UPS’s cost-cutting initiatives drive meaningful margin expansion and volumes start growing again, the market might reward the stock with a higher valuation multiple. But that’s speculative right now.
Here’s what we’d want to see before considering UPS a buy:

Evidence of volume growth
Sustained margin improvement that closes the gap with industry peers
Multiple quarters demonstrating the turnaround is real, not just a one-time beat

Until then, investors are likely better off waiting on the sidelines. A cheap stock can always get cheaper when the business fundamentals don’t support even a discounted valuation. With UPS, you’re being asked to pay for a turnaround that hasn’t yet materialized—and that’s not a bet we’d take at current levels. Remember, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which 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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