Core Viewpoint - UPS is currently facing significant challenges due to lower volumes and higher costs, particularly from wage inflation resulting from a new contract with the Teamsters union, which has led to a decline in share performance compared to the S&P index [2][5] Current Headwinds - UPS reported a revenue of $21.7 billion for the first quarter, down 5.3% year-over-year, with diluted earnings per share of $1.43 reflecting a 35% decline compared to the same period in 2023 [5] - Average daily volume decreased by 3.2% year-over-year, with B2B average daily volume down 5.5%, primarily due to declines in retail and manufacturing sectors [5] Secular Tailwinds - Despite current challenges, e-commerce continues to gain market share, which is expected to benefit UPS in the long term [6] - UPS is expanding its addressable market share, particularly in big and bulky deliveries and healthcare logistics, aiming for $20 billion in annual revenue from healthcare by 2026 [6] Financials - The combination of higher costs and lower revenue has significantly impacted profitability, with normalized diluted earnings per share falling almost by half [7] - Management is optimistic about revenue growth in the second half of the year [7] Strong Competitive Moat - UPS maintains attractive returns on invested capital, reflecting its strong competitive moat derived from its scale advantages and logistics network [8] - The company has secured a profitable air cargo contract with the U.S. Postal Service, enhancing its competitive position [10] Returns Business - UPS is leveraging its extensive store network to expand its returns business through initiatives like Happy Returns, which offers convenient return options [11] Peers - UPS has a stronger competitive moat compared to FedEx and DHL Express, as evidenced by its superior financial metrics [12][13] Dividend Policy - UPS has a high dividend yield of approximately 4.7% and intends to maintain its dividend despite reduced earnings, with a targeted payout ratio of 50% [14][15] Balance Sheet - UPS has a strong balance sheet with significant liquidity and investment-grade credit ratings, although its debt levels have increased over the past decade [16] Outlook - UPS is guiding for fiscal year 2024 revenue between $92 billion and $94.5 billion, with long-term targets of $108 billion to $114 billion by 2026 [18] Valuation - UPS is currently trading below its ten-year average price to cash flow from operations, indicating an undemanding valuation [19]

The package delivery giant has laid out its medium-term goals. If it hits them, the stock at current prices will have been a great value opportunity.UPS (UPS 0.03%) management set out its targets for 2026 during its investor day event in March, and they will serve as a guidepost for investors. The question is not whether UPS will be a good value at current prices if it hits those goals, but whether it will achieve its aims. Here's what you need to know about the company's plans for the next three years.UPS ...

The sell-off in UPS has gone too far.United Parcel Service (UPS 0.06%) stock gained an impressive 83% between 2020 and the end of 2021 -- benefiting from a shift away from services and in-store shopping toward home delivery. But since the beginning of 2022, UPS is down over 35% compared to a 12% gain in the S&P 500.Here's why the high-yield dividend stock deserved to sell off but is worth buying now. A major slowdownOne look at a chart of UPS' stock price, sales, and operating margin, and it's easy to see w ...

The delivery giant's dividend looks sustainable, but there is little room for significant improvement in the coming years.Investors attracted to UPS (UPS 1.43%) stock are, no doubt, drawn at least in part by its generous 4.7% dividend yield. But how sustainable is that payout, and what are the prospects that the company will continue its 15-year run of raising its dividend per share next year? Here's the lowdown.UPS' dividend payoutUsually, when investors discuss a payout ratio, they compare dividends per s ...

The package delivery giant isn't firing on all cylinders right now, but its stock does offer a compelling dividend.United Parcel Service (UPS -2.02%) stock currently offers a compelling 4.7% dividend yield. Based on that yield, an investment of $21,276 in the stock would buy almost 157 shares that would generate roughly $1,000 in annual income in 2024. That's a pretty decent return all by itself.There's also potential for UPS' stock to appreciate if this multinational shipping & receiving and supply chain m ...

ricochet64/iStock Editorial via Getty Images Shares of UPS (NYSE:UPS) have been performing poorly since the burst of the post-COVID eCommerce bubble, and the firm has been losing market share to Amazon (AMZN) at an accelerating pace in recent times. These situations might be difficult to time, but UPS still has a solid competitive position and is exposed to ongoing tailwinds of growth in eCommerce, which appears to have mostly normalized following the last few years of volatility. I share why I think th ...

Core Viewpoint - United Parcel Service, Inc. (UPS) has experienced a significant decline in share price, down nearly 17% over the past year, underperforming compared to its rival FedEx and the S&P 500 Index, which has seen a total return of over 26% during the same period. However, the stock's valuation has become more attractive, and there is potential for earnings growth to reaccelerate in the coming years, making it a potential long-term investment opportunity [2]. Recent Performance - UPS's earnings-per-share (EPS) grew 9.3% from 2019 to 2020 and surged over 47% in 2021, but faced a 32% decrease in EPS in 2023 due to reduced demand and higher costs [3]. - In the first quarter of 2024, UPS reported a revenue decline of 5.2% to $21.7 billion, missing estimates by $240 million. Adjusted EPS was $1.43, down from $2.20 the previous year, although it exceeded expectations by $0.08. All business segments showed year-over-year declines, with U.S. Domestic revenue down 5% and International revenue down 6.3% [3][4]. Positive Developments - Despite the mixed results, the rate of revenue decline has slowed for three consecutive quarters, indicating a potential stabilization. Each segment's decline rate has also improved, with U.S. Domestic daily volume decreasing by 7.4% in Q4 2023 compared to larger declines in previous quarters [4]. - UPS's price-per-piece remained stable in the U.S. Domestic business, and while union wage costs increased by 13%, the company managed to reduce other costs, leading to a 0.8% decline in adjusted operating expenses [4]. Future Outlook - UPS projects a revenue decrease of 7% for 2024 but anticipates positive sales and volume growth in the second half of the year, which would be a significant turnaround after experiencing mid-single- to low double-digit decreases over the past five quarters [5]. - Analysts have mixed reactions to UPS's quarterly report, with more downward revisions for 2024 revenue and EPS estimates. However, future projections indicate expected growth in EPS by at least mid-teens percentages over the next two years, aided by a new agreement with the United States Postal Service [6][7]. Valuation and Dividend - UPS's stock closed at approximately $139, implying a forward price-to-earnings ratio of just under 17, aligning with its historical average. The company is expected to see volume growth return in the latter half of the year, and analysts project a valuation range of 16 to 18 times earnings, with potential returns of 3% to 16% in 2025 [9]. - The dividend yield stands at 4.7%, one of the highest in over a decade, providing a strong incentive for investors while the company aims for growth. The projected payout ratio for 2024 is 80%, which is high but expected to stabilize with anticipated growth [9].

It has been about a month since the last earnings report for United Parcel Service (UPS) . Shares have lost about 1.9% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is UPS due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Earnings Beat at UPS in Q1United Parcel Ser ...

The company's dividend looks sustainable, provided management hits its medium-term targets.UPS' (UPS -0.28%) current forward dividend yield of around 4.4% is highly attractive for income-seeking investors, but is the payout sustainable? The company's earnings have disappointed recently, and the dividend cover looks pretty thin in 2024. Is UPS a stock for dividend hunters to buy? Here's what you need to know before buying the stock.UPS' dividendThe company's trailing-12-month dividend cost it about $5.4 bill ...

United Parcel Service (UPS) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.Over the past month, shares of this package delivery service have returned +0.4%, compared to the Zacks S&P 500 composite's -0.3% change. During this period, the Zacks Transportation - Air Freight and Cargo industry, which UPS falls in, has lost 3.1%. The key question now is: What could be ...