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United Parcel (UPS)
NYSE:UPS
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United Parcel
(NYSE:UPS)
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Rating:66Neutral
Price Target:
$116.00
▲(3.71% Upside)
The score reflects moderate financial strength constrained by cooling revenue/margins and elevated leverage, partially offset by a strong technical uptrend. Valuation is supported by a reasonable P/E and high dividend yield, while earnings-call guidance is cautiously constructive but highlights meaningful near-term margin and volume headwinds that raise execution risk.
Positive Factors
Global scale & network
UPS's global footprint across 220+ countries creates a durable competitive moat: extensive network density, cross-border capabilities and long-term carrier relationships support sustained service reach, making it hard for new entrants to replicate end-to-end logistics coverage.
Automation & network reconfiguration
Substantial automation and network reconfig programs (57 automated buildings, ~68% target U.S. volume automated) deliver structural cost-per-piece reductions and allow scaling with lower marginal cost, supporting longer-term margin resilience once reconfiguration is fully realized.
Cash generation & capital allocation
Consistent operating cash flow and meaningful shareholder returns demonstrate durable cash conversion and disciplined capital allocation, enabling continued investment in automation, fleet modernization and dividends while supporting financial commitments despite near-term volume variability.
Negative Factors
Elevated leverage
Sustained leverage near 1.5x equity constrains balance-sheet flexibility, increasing sensitivity to cash-flow swings. In a cyclical volume downturn, higher debt amplifies funding risk for capex, pension contributions and dividends, limiting strategic optionality over the medium term.
Volume and revenue weakness
Multi-year flat-to-declining revenue and steep ADV declines reflect structural demand headwinds (Amazon glide-down, trade-policy shifts). Persistent volume erosion pressures unit economics, reduces fixed-cost absorption, and lengthens the timeline to return to durable growth.
Near-term margin pressure & transition costs
Timing lags between volume declines and fixed-cost removal, plus aircraft lease and outsourcing transition costs, create durable margin execution risk. Even with planned savings, near-term margin compression and implementation risk could persist into subsequent quarters before benefits fully accrue.
United Parcel (UPS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$93.55B
Dividend Yield6.55%
Average Volume (3M)5.02M
Price to Earnings (P/E)16.8
Beta (1Y)0.79
Revenue Growth-1.25%
EPS Growth-2.25%
CountryUS
Employees490,000
SectorIndustrials
Sector Strength72
IndustryIntegrated Freight & Logistics
Share Statistics
EPS (TTM)2.38
Shares Outstanding738,990,050
10 Day Avg. Volume6,710,609
30 Day Avg. Volume5,022,341
Financial Highlights & Ratios
PEG Ratio-5.19
Price to Book (P/B)5.19
Price to Sales (P/S)0.95
P/FCF Ratio17.67
Enterprise Value/Market Cap1.30
Enterprise Value/Revenue1.37
Enterprise Value/Gross Profit3.43
Enterprise Value/Ebitda11.01
Forecast
1Y Price Target
$112.45Price Target Upside0.54% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering21
EPS Forecast (FY)7.08
Revenue Forecast (FY)$89.05B
United Parcel Business Overview & Revenue Model
Company DescriptionUnited Parcel Service, Inc. provides letter and package delivery, transportation, logistics, and related services. It operates through two segments, U.S. Domestic Package and International Package. The U.S. Domestic Package segment offers time-definite delivery of letters, documents, small packages, and palletized freight through air and ground services in the United States. The International Package segment provides guaranteed day and time-definite international shipping services in Europe, the Asia Pacific, Canada and Latin America, the Indian sub-continent, the Middle East, and Africa. This segment offers guaranteed time-definite express options. The company also provides international air and ocean freight forwarding, customs brokerage, distribution and post-sales, and mail and consulting services in approximately 200 countries and territories. In addition, it offers truckload brokerage services; supply chain solutions to the healthcare and life sciences industry; shipping, visibility, and billing technologies; and financial and insurance services. The company operates a fleet of approximately 121,000 package cars, vans, tractors, and motorcycles; and owns 59,000 containers that are used to transport cargo in its aircraft. United Parcel Service, Inc. was founded in 1907 and is headquartered in Atlanta, Georgia.
How the Company Makes MoneyUPS generates revenue through multiple streams, primarily from its package delivery services, which include both domestic and international shipments. The company charges customers based on weight, dimensions, distance, and delivery speed. Additionally, UPS earns significant income from its freight services, which includes less-than-truckload (LTL) and full-truckload (FTL) shipping solutions for businesses. The company's logistics and supply chain services also contribute to its revenue, providing tailored solutions to optimize inventory and distribution for its clients. Partnerships with major retailers and e-commerce platforms enhance UPS's earnings by offering shipping and logistics solutions for online orders. Furthermore, UPS invests in technology and infrastructure, allowing for operational efficiencies that can drive profitability. Key factors contributing to its earnings include the growth of e-commerce, demand for reliable delivery services, and strategic acquisitions that expand its service capabilities.
United Parcel Key Performance Indicators (KPIs)
Any
Average Daily Packages
Indicates the volume of packages handled daily, highlighting operational scale, efficiency, and demand trends in the logistics network.
Indicates the volume of packages handled daily, highlighting operational scale, efficiency, and demand trends in the logistics network.
Data provided by:
The Fly
The FlyUnited Parcel Earnings Call Summary
Earnings Call Date:Jan 27, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call conveyed a cautiously positive outlook: management reported strong revenue-quality improvements, significant one-time and structural cost savings ($3.5B in 2025 and targeted ~$3.0B more tied to the Amazon glide-down), meaningful automation and digital wins, and solid cash generation. However, the company faces material near-term headwinds — volume declines (notably Amazon-related and trade-policy impacts), temporary margin pressure in H1 2026 from the glide-down, Groundsaver transition and MD-11 lease costs, and international trade-lane mix shifts. Management emphasized a two‑half 2026 shape (first-half weakness, second-half recovery) and expects longer-term margin benefits once reconfiguration and automation ramp. Overall, the achievements and actionable cost-savings plans outweigh the near-term challenges but warrant monitoring of the execution through 2026.Q4-2025 Updates
Positive Updates
Strong Q4 and FY2025 Financials
Q4 consolidated revenue $24.5B; Q4 operating profit $2.9B; Q4 operating margin 11.8%; Q4 diluted EPS $2.38. Full-year 2025 consolidated revenue $88.7B; operating profit $8.7B; operating margin 9.8%.
Revenue Quality and Pricing Gains
U.S. revenue per piece improved materially: +8.3% year over year in Q4 and management noted +7.1% Y/Y for 2025. Base rates and package characteristics contributed ~340 bps of Q4 rep-per-piece growth; customer/product mix added ~320 bps.
Customer Mix Improvements (SMB & B2B)
SMB penetration rose to 31.8% of total U.S. volume (highest fourth quarter SMB level historically); Q4 SMB share 31.2% (↑340 bps Y/Y). B2B share increased (management cited 42.3% of U.S. volume in 2025 and Q4 B2B at 37.5%, +220 bps Y/Y), reflecting a shift to higher-yield volume.
Material Cost Savings and Network Reconfiguration
Delivered $3.5B in savings from network reconfiguration and efficiency reimagined initiatives in 2025. Targets for 2026 include an additional ~$3.0B in savings tied to the Amazon glide-down and network changes.
Automation and Productivity Gains
Deployed automation in 57 buildings in 2025; 66.5% of U.S. volume processed through automated facilities at year-end 2025 and targeted to reach 68% by end of 2026. Automated facilities show ~28% lower cost per piece versus conventional buildings.
Workforce and Operational Reductions
Removed 26.9 million labor hours in 2025; reduced ~48,000 operational positions (including 15,000 fewer seasonal positions); closed 195 operations (including 93 buildings) to align capacity with lower volumes.
Digital & Healthcare Growth
Digital access program revenue grew ~25% Y/Y to $4.1B globally; UPS Digital (Roadie & Happy Returns) revenue grew ~24-27% Y/Y. Completed acquisitions (Frigo Trans and Ann Lower Healthcare Group); healthcare logistics revenue reached $11.2B in 2025.
Strong Cash Generation and Capital Allocation
Generated $8.5B cash from operations in 2025; returned $6.4B to shareholders (dividends $5.4B, share repurchases $1.0B). Full-year 2026 free cash flow expected ≈$6.5B; CapEx planned ≈$3.0B; 2026 guidance: consolidated revenue ≈$89.7B and operating margin ≈9.6%.
Fleet Modernization
Accelerated retirement of MD-11 fleet (one-time $137M after-tax write-off in 2025) and will replace with 18 Boeing 767s (15 expected in 2026), improving long-term air fleet efficiency.
Operational Performance & Service Leadership
Maintained industry-leading on-time service during peak for the eighth consecutive year; management highlighted efficient peak operations despite MD-11 grounding.
Negative Updates
Volume Declines and Mix Headwinds
Full-year 2025 ADV declined 8.6%. Q4 total U.S. average daily volume down 2.4M pieces (−10.8% Y/Y). Total air ADV down 11.9%; ground ADV down 10.6%; Groundsaver ADV down 27.7%; B2C ADV down 13.8%.
International Volume & Trade Policy Impact
International ADV down ~4.7% in Q4; exports down 5.8% Q4 Y/Y; U.S. imports down 24.4% Y/Y with Canada & Mexico lanes down ~30.5% and China->U.S. lane down ~20.9%, driven by tariff and de minimis policy changes. International operating profit was down $154M in Q4 and management expects steep near-term pressure (profit down ~30% in Q1 2026).
Near-Term Margin Pressure and Transition Costs
Management expects ~100 bps of U.S. margin pressure in H1 2026 driven by: Amazon glide-down timing lag on fixed costs, transition costs from outsourcing Groundsaver to USPS, and incremental aircraft lease costs after MD-11 grounding. Q4 U.S. cost per piece increased 8.9% Y/Y.
MD-11 Grounding Lease Costs and One-Time Charges
Grounding/retirement of MD-11s caused incremental lease/air capacity costs (~$50M incremental lease cost in Q4; ~double that in 2026 with ~90% in H1). GAAP charges for 2025 totaled $238M ($0.28/sh) including a $137M after-tax write-off of MD-11s and $101M transformation charges.
Supply Chain Solutions Softness
Supply Chain Solutions Q4 revenue $2.7B, down $388M Y/Y due to lower market rates in air/ocean forwarding and weaker mail innovation; logistics decline partially offset by healthcare growth. Q4 operating margin improved but revenue weakness noted.
Temporary Earnings & EPS Uncertainty
2026 EPS expected to be about flat to 2025; management noted 2025 EPS included a $0.30 benefit from a sale-leaseback, and the company does not expect significant tariff changes in guidance. Near-term EPS upside limited until reconfiguration benefits fully realized (management expects more of the Groundsaver/SurePost benefit by 2027).
Service-Related Safety Incident
Tragic crash of UPS flight 2976 resulted in loss of life; acknowledged as a significant human/safety and operational event with reputational and community impact (management expressed condolences and described response efforts).
Timing Lag in Cost Reductions
Management emphasized lag between volume declines and realization of fixed/semi-variable cost reductions; actions (attrition, voluntary separation programs) will take time, creating near-term earnings pressure despite planned savings.
Company Guidance
UPS guided to full-year 2026 consolidated revenue of approximately $89.7 billion and a consolidated operating margin of about 9.6%, with diluted EPS expected to be roughly flat to 2025; free cash flow is targeted at ~ $6.5 billion (including an annual pension contribution of ~$1.3 billion), capital expenditures around $3.0 billion, planned dividends of ~$5.4 billion, total below‑the‑line expense of ~ $760 million (including pension income of ~$250 million) and a tax rate of ~23%; segment-level guidance includes U.S. Domestic revenue roughly flat (ADV down mid-single digits, revenue per piece up mid-single digits), full‑year domestic margin flat to 2025 with first‑half domestic margins in the mid‑single digits and a second‑half rebound (high single‑digit operating profit growth, exiting toward a healthy double‑digit margin), another 1 million pieces/day Amazon glide‑down in 2026 with targeted ~$3.0 billion savings (reduce ~25 million operational hours, up to ~30,000 operational positions, 24 buildings identified for H1 closure and automation to process ~68% of U.S. volume by year‑end), International revenue up low single digits with operating margin in the mid‑teens (near‑term pressure and ~30% profit decline expected in Q1), and Supply Chain Solutions revenue up high single digits with operating margin in the low double digits; guidance assumes ~18 Boeing 767 deliveries (15 in 2026), includes an expected incremental MD‑11 related lease cost roughly double Q4 (~$100 million in 2026, ~90% in H1), and does not assume material changes to the current tariff landscape.United Parcel Financial Statement Overview
Summary
Durable profitability and consistently positive operating cash flow, but revenue has been flat-to-down since 2022 with a meaningful decline in 2025. Margins are compressed versus the 2021–2022 peak and leverage remains elevated (~1.5x debt-to-equity), reducing flexibility; free cash flow is solid but somewhat volatile and covers only a little over half of net income.Income Statement
Revenue has been largely flat to down since 2022, with 2025 showing a meaningful decline versus 2024. Profitability has also compressed from the 2021–2022 peak: operating and net margins are materially lower than in 2022, though still positive and relatively steady around mid-single-digit net margins in 2023–2025. Overall, the income statement reflects a durable earnings base, but a weaker growth and margin trajectory versus prior years.62
Positive
Balance Sheet
Leverage is elevated and persistent, with debt running around 1.5x equity in recent years (2023–2025), limiting balance-sheet flexibility. Equity has been relatively stable, and returns on equity are strong, but that strength is amplified by leverage rather than purely by operating expansion. Total assets are steady, yet the consistently higher debt load keeps balance-sheet risk moderate.58
Neutral
Cash Flow
Cash generation remains solid, with operating cash flow consistently positive, but it has stepped down from 2021–2022 levels. Free cash flow improved in 2024 but declined again in 2025, indicating some volatility in cash conversion. Free cash flow covers only a little over half of net income in recent years (roughly mid-50% to low-60%), suggesting earnings quality is acceptable but not exceptional.61
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 88.66B | 90.89B | 90.75B | 100.03B | 97.20B |
| Gross Profit | 16.03B | 17.06B | 17.71B | 20.08B | 17.43B |
| EBITDA | 11.93B | 11.91B | 12.71B | 18.71B | 20.23B |
| Net Income | 5.57B | 5.78B | 6.71B | 11.55B | 12.89B |
Balance Sheet | |||||
| Total Assets | 73.09B | 70.07B | 70.86B | 71.12B | 69.41B |
| Cash, Cash Equivalents and Short-Term Investments | 5.89B | 6.32B | 6.04B | 7.59B | 10.59B |
| Total Debt | 32.29B | 25.65B | 26.73B | 23.52B | 25.53B |
| Total Liabilities | 56.84B | 53.33B | 53.54B | 51.32B | 55.14B |
| Stockholders Equity | 16.23B | 16.72B | 17.31B | 19.79B | 14.25B |
Cash Flow | |||||
| Free Cash Flow | 4.76B | 6.21B | 5.08B | 9.34B | 10.81B |
| Operating Cash Flow | 8.45B | 10.12B | 10.24B | 14.10B | 15.01B |
| Investing Cash Flow | -4.74B | -217.00M | -7.13B | -7.47B | -3.82B |
| Financing Cash Flow | -4.14B | -6.85B | -5.53B | -11.19B | -6.82B |
United Parcel Technical Analysis
Positive
111.85
Price Trends
101.88
Positive
95.15
Positive
94.32
Positive
Market Momentum
1.95
Positive
66.93
Neutral
59.89
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UPS, the sentiment is Positive. The current price of 111.85 is above the 20-day moving average (MA) of 107.38, above the 50-day MA of 101.88, and above the 200-day MA of 94.32, indicating a bullish trend. The MACD of 1.95 indicates Positive momentum. The RSI at 66.93 is Neutral, neither overbought nor oversold. The STOCH value of 59.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for UPS.
United Parcel Risk Analysis
United Parcel disclosed 22 risk factors in its most recent earnings report. United Parcel reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
United Parcel Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $21.92B | 26.62 | 36.47% | 1.02% | 12.54% | 19.59% | |
76 Outperform | $78.84B | 18.50 | 15.87% | 1.94% | 3.09% | 14.94% | |
73 Outperform | $16.90B | 14.84 | 13.83% | 2.98% | 12.89% | 3.12% | |
70 Outperform | $19.14B | 60.96 | 19.26% | ― | -0.30% | -11.02% | |
66 Neutral | $93.55B | 16.81 | 33.83% | 6.55% | -1.25% | -2.25% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $23.45B | 41.10 | 32.91% | 1.51% | -7.08% | 71.39% |
* Industrials Sector Average
UPS
United Parcel
111.85
5.45
5.12%
CHRW
CH Robinson
199.71
103.00
106.51%
EXPD
Expeditors International
162.22
51.12
46.01%
XPO
XPO
169.62
38.12
28.99%
FDX
FedEx
353.43
108.28
44.17%
ZTO
ZTO Express
22.51
4.34
23.89%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.