Is UPS Stock a Buy Before Oct. 28?

Core Viewpoint - UPS is currently facing significant challenges in its end markets and is undergoing structural changes, leading to a 32% decline in stock price, which has increased its dividend yield to 7.7%, presenting a potential investment opportunity ahead of its third-quarter earnings report on October 28 [2]. Financial Performance and Guidance - UPS likely experienced a difficult third quarter, with management not updating its full-year guidance due to uncertainties from tariffs and macroeconomic conditions [3]. - The company has not provided updated guidance since April, citing a volatile macro environment and ongoing trade uncertainties [3]. - CFO Brian Dykes indicated risks of greater variability in small and medium-sized business (SMB) and enterprise volume, with profit margins potentially under more pressure than previously anticipated [4]. Cost and Employee Management - UPS's management noted that the employee attrition rate was lower than expected, leading to higher expenses than planned in the second quarter [5]. - The company is intentionally reducing its delivery volumes for Amazon by 50% from late 2024 to mid-2026, with Amazon deliveries accounting for 11.8% of UPS's revenue in 2024 [6]. - Despite the preference for a higher attrition rate in the context of reduced delivery volumes, the actual attrition rate has not met expectations [6]. Market Challenges - UPS continues to face significant challenges in key end markets, including the reduction of delivery volumes for Amazon and taking over last-mile deliveries previously handled by the Postal Service [7]. - The company is also contending with higher-than-expected personnel costs due to lower employee turnover than predicted [7].