Core Viewpoint - United Parcel Service (UPS) is expected to report a decline in both earnings per share (EPS) and revenues for the fourth quarter of 2025, with projected EPS of $2.23 and revenues of $24.01 billion, reflecting year-over-year decreases of 18.9% and 5.1% respectively [1][2][8] Financial Performance - The Zacks Consensus Estimate for UPS' revenues in 2025 is $88.05 billion, indicating a 3.3% year-over-year decline, while the EPS estimate for 2025 is $6.98, representing a decline of approximately 9.6% [2][4] - In the trailing four quarters, UPS has beaten earnings estimates three times, with an average surprise of 11.2% [4] Earnings Predictions - UPS has an Earnings ESP of +0.58% and a Zacks Rank of 3 (Hold), suggesting a potential earnings beat for the fourth quarter [5] - The company is expected to see total operating revenues decline by 5.4% year-over-year in the December quarter, with consolidated volumes projected to drop by 10.6% [6] Operational Factors - UPS is implementing a $1 billion cost-saving plan and focusing on small and medium-sized businesses (SMBs) to offset weak shipment trends and reduced volumes from Amazon [8][9][10] - The expiration of the De Minimis exemption is anticipated to negatively impact international segment volumes, particularly affecting the China-U.S. trade lane [7] Market Position - UPS shares have decreased by over 19% in the past year, underperforming both its industry and rival FedEx, which has shown better price performance [12] - UPS is trading at a discount based on the forward 12-month Price/Sales (P/S) ratio compared to the industry average, with FedEx being cheaper [14] Strategic Focus - The company is shifting its focus towards higher-margin areas such as SMBs and healthcare logistics, which contributed 32.8% to total U.S. volume in the September quarter, reflecting a 340-basis point year-over-year improvement [11] - UPS is also enhancing automation in sorting and operations and leveraging AI for logistics planning to improve efficiency [9] Long-term Outlook - Despite current challenges, UPS has the brand and network to generate steady cash flows in the long run, making it a compelling long-term player in the transportation sector [20]

Core Viewpoint - United Parcel Service, Inc. (NYSE:UPS) is considered a potentially undervalued stock with a strong market position, but analysts have mixed views on its short-term performance due to market conditions and operational changes [1][2][4]. Group 1: Analyst Ratings and Price Targets - JPMorgan analyst Brian Ossenbeck raised the price target for UPS from $97.00 to $99.00 while maintaining a 'Neutral' rating, citing a potential short-term pullback due to expected seasonal weakness in Q1 spot truckload rates [2]. - Bernstein analyst David Vernon upgraded UPS to 'Outperform' with a price target of $125.00, arguing that concerns regarding dividends are overstated [3]. Group 2: Financial Performance and Projections - UPS shares fell approximately 20% in 2025, resulting in a dividend yield of 6% and a payout ratio of about 98% [4]. - Analysts forecast EPS growth of 4% in 2026 and 11% in 2027, contingent on the successful execution of the company's strategic plan [4]. Group 3: Company Operations - UPS focuses on global package delivery and supply chain solutions across various segments, including U.S. domestic, international, and supply chain [5].

Core Viewpoint - United Parcel Service, Inc. (NYSE:UPS) is considered a potentially undervalued stock with a strong market position, but analysts have mixed views on its short-term performance due to market conditions and operational changes [1][2][4]. Group 1: Analyst Ratings and Price Targets - JPMorgan analyst Brian Ossenbeck raised the price target for UPS from $97.00 to $99.00 while maintaining a 'Neutral' rating, citing a potential short-term pullback due to expected seasonal weakness in Q1 spot truckload rates [2]. - Bernstein analyst David Vernon upgraded UPS to 'Outperform' with a price target of $125.00, arguing that concerns regarding dividends are overstated [3]. Group 2: Financial Performance and Projections - UPS shares fell approximately 20% in 2025, resulting in a dividend yield of 6% and a payout ratio of about 98% [4]. - Analysts forecast EPS growth of 4% in 2026 and 11% in 2027, contingent on the successful execution of the company's strategic plan [4]. Group 3: Company Operations - UPS focuses on global package delivery and supply chain solutions across various segments, including U.S. domestic, international, and supply chain operations [5].

Core Viewpoint - Investing in high-yielding dividend stocks can provide extra cash flow for reinvestment or daily expenses [1] Group 1: United Parcel Service (UPS) - UPS has experienced a decline of over 17% in value this year due to tariffs and poor economic conditions affecting global trade [4] - The company has announced 48,000 job cuts to improve its financial performance amidst current challenges, with free cash flow reaching at least $1.4 billion in three of the past quarters, sufficient to cover dividend payments [5] - UPS offers a high dividend yield of 6.1%, significantly above the S&P 500 average of 1.1%, with a potential annual dividend income of approximately $370 from a $6,000 investment [6] Group 2: Enbridge - Enbridge provides a dividend yield of 5.8%, slightly lower than UPS, but is recognized for long-term stability and consistent dividend growth, having raised its quarterly dividend by 3% for the 31st consecutive year [7] - The company benefits from stable earnings due to long-term contracts and is not highly vulnerable to fluctuating commodity prices, with distributable cash flow totaling CA$9.2 billion in the first nine months of 2025, up from CA$8.9 billion in the same period last year [8]

Core Viewpoint - The future outlook for United Parcel Service (UPS) appears positive despite recent challenges, with potential for recovery and growth driven by strategic changes in revenue quality, network efficiency, and tariff management. Group 1: Revenue Quality - UPS's revenue declined by 3.7% year over year in Q3, a planned reduction as part of a broader strategy to enhance revenue quality [4][5] - The company sold its Coyote Logistics unit, leading to a significant drop in supply chain solutions revenue, while also reducing shipment volumes for Amazon to focus on higher-margin business [5] - U.S. revenue per piece increased by 9.8% year over year in Q3, and UPS aims to replace lost revenue with higher-margin business, exemplified by the acquisition of Andleuer Healthcare Group [6] Group 2: Network Efficiency - UPS is undergoing its most extensive network reconfiguration in history, having closed 93 buildings, including 19 in Q3, and implemented a voluntary retirement program for drivers [8] - The company expects to announce approximately $3.5 billion in cost reductions for 2025, contributing to improved profitability [8][9] - U.S. operating margin increased by 10 basis points in Q3, indicating early success from these efficiency efforts [9] Group 3: Tariff Management - The uncertainty surrounding tariffs has somewhat resolved, alleviating challenges faced by UPS, particularly in higher-margin international lanes [10] - While some tariff impacts may still affect small- and medium-sized businesses in 2026, the overall outlook for UPS regarding tariffs is improving [10] - UPS is leveraging agentic AI technology to enhance customs brokerage capabilities, helping customers navigate trade complexities and reinforcing its role in global commerce [11]

Core Insights - During market turbulence, investors often seek dividend-yielding stocks, which typically have high free cash flows and offer substantial dividends [1] Group 1: United Parcel Service Inc (UPS) - UPS has a dividend yield of 6.14% [3] - JP Morgan analyst Brian Ossenbeck maintained a Neutral rating and raised the price target from $97 to $99 [3] - Citigroup analyst Ariel Rosa maintained a Buy rating and increased the price target from $120 to $126 [3] - UPS is set to release its fourth-quarter 2025 results on January 27, 2026 [3] Group 2: Karat Packaging Inc (KRT) - KRT has a dividend yield of 7.21% [5] - B of A Securities analyst George Staphos downgraded the stock from Buy to Underperform and reduced the price target from $27 to $22 [5] - Truist Securities analyst Jake Bartlett maintained a Hold rating and raised the price target from $28 to $31 [5] - KRT posted mixed quarterly results on November 6, 2025 [5] Group 3: Robert Half Inc (RHI) - RHI has a dividend yield of 8.33% [8] - Barclays analyst Manav Patnaik maintained an Equal-Weight rating and cut the price target from $45 to $36 [8] - BMO Capital analyst Jeffrey Silber maintained a Market Perform rating and reduced the price target from $36 to $31 [8] - RHI reported weaker-than-expected quarterly results on October 22, 2025 [8]

This story was originally published on Supply Chain Dive. To receive daily news and insights, subscribe to our free daily Supply Chain Dive newsletter. FedEx and UPS surcharge changes taking effect this month could increase expenses for shippers with larger packages, parcel pricing experts say. On Jan. 12, FedEx expanded its assessment for determining which shipments will incur a dimensional additional handling surcharge or an oversize charge. The carrier has added a cubic volume criterion to the dimen ...

Core Insights - Ground shipping costs are expected to rise further in Q1 due to annual price increases, impacting shippers financially in an already expensive delivery service environment [3] - FedEx and UPS are strategically prioritizing small- and medium-sized businesses (SMBs) to enhance profitability per package, with both companies reporting positive momentum in this sector [5][6] Group 1: Shipping Costs and Discounts - Rates for ground and express parcels are projected to increase, with per-package ground delivery rates in Q4 being 34.1% above the January 2018 baseline, while express rates rose to 5% above the baseline [7] - Discounts for FedEx and UPS shippers increased in Q4 after a decline in the previous two quarters, with average discounts rising by 0.7 percentage points for express shipments and 0.3 percentage points for ground shipments [4][7] - The increase in discounts primarily benefited small and medium-sized shippers for ground deliveries, while larger customers received more benefits from express shipment discounts [7] Group 2: Strategic Focus on SMBs - FedEx and UPS are focusing on gaining market share in the SMB segment, which is often more profitable on a per-package basis compared to large-scale clients [5] - UPS reported taking share in both volume and value from SMBs in Q3, while FedEx noted a strong quarter for business-to-business shipments among smaller shippers [6]

Core Thesis - The bullish thesis on United Parcel Service, Inc. (UPS) highlights its attractive valuation and defensive investment profile, despite mixed fundamental performance [1][5]. Valuation - UPS is currently trading at $107.40 with a trailing P/E of 16.47 and a forward P/E of 14.51 [1]. - The stock is priced near the low end of the sector at approximately 15.6x next-twelve-month earnings, which is a discount compared to peers like DHL at around 18x and GXO at roughly 19x [2]. Fundamental Performance - Revenue growth at UPS has been slower than its peers, attributed to softer volume trends and a strategic shift away from reliance on Amazon [3]. - Operating efficiency is less compelling, with gross margins approximately 800 basis points below those of FedEx, indicating cost and pricing challenges [3]. Earnings Quality - UPS's net income margins are about 200 basis points higher than those of FedEx and DHL, leading to superior returns on equity compared to its peers [4]. Investment Outlook - The investment case for UPS is not based on a significant re-rating but rather presents a defensive opportunity for investors seeking to lower portfolio beta while targeting a reasonable 30-50% upside over time [5]. - UPS is viewed as a balanced risk-reward setup, particularly appealing to cautious investors in the current macroeconomic environment [5].

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