UPS Stock Trades Near 52-Week Low: Time to Buy, Sell or Hold?

Core Insights - United Parcel Service (UPS) shares have shown a consistent downward trend, currently trading near a 52-week low of $82, with a closing price of $83.18 as of October 13 [1] - Year-to-date, UPS shares have declined by 34%, underperforming the Zacks Transportation—Air Freight and Cargo industry's decline of 27.5%, and lagging behind competitors FedEx and GXO Logistics [2][9] Factors Hurting UPS Stock - The expiration of the De Minimis exemption on August 29 has led to shipment backlogs and customer complaints, as UPS has reportedly discarded some international shipments due to customs bottlenecks [6] - Concerns about dividend sustainability have arisen due to UPS's high dividend payout ratio of 87%, which raises questions about its ability to maintain dividends in the long term [7][10] - A significant decline in shipping demand has negatively impacted UPS, with average daily volumes down 3.8% year-over-year in the first half of 2025, and revenues decreasing by 2.7% year-over-year in the June quarter [11] Earnings Estimate Revisions - In the past 60 days, the Zacks Consensus Estimate for UPS's earnings for the third and fourth quarters of 2025, as well as for the full years 2025 and 2026, has been revised downward [12] Valuation Insights - UPS is currently considered relatively undervalued, trading at a forward 12-month price to sales (P/S) ratio of 0.8X, which is lower than the industry average but slightly higher than FedEx and GXO Logistics [13] Current Outlook - Despite UPS's attractive valuation, ongoing revenue challenges and doubts regarding dividend sustainability present significant headwinds [16] - The current situation of package backlogs is detrimental to customer satisfaction, leading to a Zacks Rank 4 (Sell) for UPS, indicating it may be a stock to avoid [17]