Key Points Shares of United Parcel Service have seen years of underperformance. But now the stock sports a low valuation and impressive dividend yield. Are the company's negative headwinds finally priced into the shares? 10 stocks we like better than United Parcel Service › On the surface, United Parcel Service (NYSE: UPS) doesn't look like the type of company you would expect to struggle. Founded in 1907 and going public in 1999, the Atlanta-based logistics giant is a ubiquitous presence in Ameri ...

Core Viewpoint - United Parcel Service (UPS) is undergoing a turnaround effort, showing early signs of improvement, making it an attractive investment opportunity despite its current challenges [1][8]. Group 1: Market Sentiment - UPS is currently viewed negatively by investors, with shares down over 50% from their peak in early 2022 due to a return to normal demand after the pandemic [2][10]. - The company has established a robust infrastructure for package delivery, which is difficult to replicate, indicating long-term value despite current market pessimism [4][5]. Group 2: Valuation Metrics - UPS's price-to-sales ratio is approximately 0.9x, significantly lower than its five-year average of 1.4x, suggesting the stock is undervalued [6]. - The price-to-earnings ratio is just under 15x, compared to a longer-term average of around 18x, further indicating a potential buying opportunity [6]. - The price-to-book value ratio stands at 5.1x, well below its five-year average of 8.5x, reinforcing the notion of attractive pricing [6][7]. Group 3: Operational Improvements - UPS management has recognized inefficiencies and is implementing a comprehensive overhaul, including exiting unprofitable business lines and investing in technology [10][11]. - Early results show positive trends, with revenue per piece in the U.S. market increasing by 5.5% in Q2 2025 and 9.8% in Q3 2025, indicating that management's efforts are beginning to yield results [11][12].

Group 1: Transportation Stocks Overview - United Parcel Service, Berkshire Hathaway, and Joby Aviation are highlighted as key transportation stocks to monitor, with significant trading volumes recently [2] - Transportation stocks are sensitive to economic activity, fuel costs, trade flows, and regulatory changes, making them cyclical investments [2] Group 2: United Parcel Service (UPS) - United Parcel Service, Inc. specializes in package delivery and offers a range of services including transportation, logistics, and insurance [3] - The company operates through two main segments: U.S. Domestic Package and International Package, focusing on express delivery services [3] Group 3: Berkshire Hathaway (BRK.B) - Berkshire Hathaway Inc. operates in various sectors including insurance, freight rail transportation, and utilities [4] - The company provides a wide array of insurance products and operates railroad systems across North America, along with energy generation and distribution [4] Group 4: Joby Aviation (JOBY) - Joby Aviation, Inc. is focused on developing electric vertical takeoff and landing aircraft for air transportation services [5] - The company aims to create an aerial ridesharing service and a platform for consumers to book rides [5]

Positive Outlook for UPS - United Parcel Service (UPS) reported better-than-expected third-quarter results, leading to a significant increase in its stock price [1] - The company is expected to navigate current challenges, with some issues likely to resolve by the end of the decade [2][8] Future Challenges and Opportunities - Tariffs are anticipated to be less of a concern in five years due to potential changes in the political landscape [2] - The impact of reduced Amazon shipment volumes is expected to be fully absorbed by 2030, ultimately enhancing profitability [3] - Advancements in technology, including AI and robotics, are projected to improve operational efficiency and reduce fuel costs through electric vehicle innovations [4] Market Position and Demand - The demand for package delivery is expected to remain strong, with UPS's scale providing a competitive advantage [5][8] - UPS has maintained a high dividend yield of over 7% and has consistently increased its dividend since 1999, making it attractive to income investors [7] Potential Risks - There are concerns regarding a possible dividend cut in the future, which could negatively impact investor sentiment [9]

Core Insights - United Parcel Service (UPS) has significantly reduced its workforce by 48,000 jobs in the first nine months of the year as part of a turnaround strategy amid declining revenues and package volumes [1][6] - The company reported third-quarter earnings of $1.3 billion and revenue of $21.4 billion, both of which were declines but exceeded Wall Street's expectations [1] - UPS has been impacted by external factors such as tariffs and a decrease in package volumes, particularly from China, which fell 30% year over year in the third quarter [3] Financial Performance - UPS's third-quarter earnings were $1.3 billion, with a revenue of $21.4 billion, indicating a decline compared to previous periods but still surpassing market expectations [1] - The company has achieved $2.2 billion in year-over-year cost savings as of September 30, 2023, and aims to reach a total of $3.5 billion by the end of the year [6] Strategic Changes - Under CEO Carol Tomé, UPS is implementing a $3.5 billion cost-reduction plan that includes job cuts and the scaling back of unprofitable business segments, such as reducing Amazon shipping volumes by 50% by the second half of 2026 [3][6] - In the third quarter, UPS successfully reduced Amazon parcel deliveries by 21% compared to the previous year, despite Amazon contributing nearly 12% of revenue in 2024 [3] Market Position - UPS's stock has a high dividend yield of 7.4%, which is more than three times the S&P 500 average of 2.3%, raising concerns about sustainability; however, executives have indicated that there are no plans for a dividend cut [4]

Core Insights - UPS reported third-quarter earnings per share of $1.74 from sales of $21.4 billion, exceeding Wall Street's expectations of $1.32 from $20.9 billion in sales [3] - The company plans to maintain its dividend payments at approximately $5.5 billion for the full year, implying quarterly payouts of about $1.64, which matches the current quarterly dividend [3] - UPS's stock rose by 7.5% to $95.99 following the earnings report, reflecting investor relief after a challenging period for the company [4] Financial Performance - UPS's earnings and sales have declined since 2022, when the company benefited from a post-pandemic shipping boom, reporting earnings of $12.94 from over $100 billion in sales [5] - The company faced lower domestic volumes and higher labor costs due to a 2023 agreement with the Teamsters union, leading to a significant drop in stock value, down about 31% this year and 37% over the past 12 months [6] - Adjusted operating profit margins improved to 10% in the latest quarter, up from 8.8% in Q2 2025 and 8.9% in Q3 2024 [9] Workforce and Cost Management - UPS plans to eliminate 34,000 operational jobs in addition to 14,000 management positions previously announced, as part of efforts to control costs amid lower shipping volumes [6] - The company ended 2024 with approximately 490,000 employees [6] Market Position and Analyst Ratings - UPS's stock is currently trading at about 12.6 times estimated next year's earnings, down from an average of 15 times in 2022, indicating a low price-to-earnings ratio [7] - The stock has a dividend yield of 7.4%, significantly higher than the S&P 500 average of 2.3%, which raises concerns about potential cuts [7][8] - Analyst Jonathan Chappell revised his 2026 earnings estimate for UPS to $7.05, down from $7.50, with a Hold rating and a price target of $92 [10][11]

By Abhinav Parmar and Lisa Baertlein (Reuters) -United Parcel Service posted better-than-expected quarterly results on Tuesday, in an early sign that its overhaul, which has included cutting 48,000 jobs this year, is making headway after several quarters of weak demand. Shares in the world's biggest parcel delivery firm surged nearly 13% in early trading, with rival FedEx also gaining almost 3%. UPS shares had been down about 28% since the start of the year. The results signal progress in UPS' efforts t ...

Core Insights - UPS shares have declined significantly, losing nearly 33% in the past year and over 60% since early 2022, resulting in a dividend yield of 7.5%, which is substantially higher than the S&P 500's 1.2% and FedEx's 2.4% [1][3] Financial Performance - UPS's second-quarter revenue decreased by nearly 3% to $21.2 billion, with adjusted earnings dropping 13% to $1.55 per share, impacting cash flow [4] - Cash flow from operations was $2.7 billion and free cash flow was $742 million in the first half of the year, both significantly lower than last year's figures of $5.3 billion and nearly $3.4 billion respectively [4] Dividend Sustainability - The company paid $2.7 billion in dividends in the first half of the year, which was $2 billion more than its free cash flow during the same period, leading to increased debt [5] - Long-term debt rose from $19.5 billion to $23.8 billion, indicating reliance on debt to fund dividends, which is not sustainable long-term [5] Strategic Initiatives - UPS has initiated a two-pronged strategy to realign its business, focusing on reducing reliance on Amazon and enhancing higher-margin operations like healthcare logistics [6] - The company aims to achieve $3.5 billion in annual cost savings by the end of the year through various measures, including closing buildings and reducing headcount [6][7]

Core Insights - The ending of the duty-free de minimis provision is causing significant stress on customs clearance providers in the U.S., leading to a backlog of packages awaiting clearance [1] - UPS is facing customer backlash due to allegations of disposing of some international shipments before they reach their final destination [1][2] Customs Clearance Challenges - A report indicated that the backlog in UPS warehouses has resulted in the disposal of shipments due to heavy customs bottlenecks [2] - Customers have reported waiting weeks for packages, with some tracking updates indicating that packages are "undeliverable" or "in the process of being disposed" [3] UPS Response to Regulatory Changes - UPS stated that changes to U.S. import regulations have led to a backlog of packages, prompting the suspension of its money-back "Service Guarantee" for international shipments on October 2, which was later reinstated [4] - UPS claims that over 90% of imported packages are cleared on the first day of arrival at U.S. ports, while the remaining 10% often lack necessary information for customs clearance [5][6] Compliance and Communication Efforts - UPS emphasized the importance of compliance with federal customs regulations and is making multiple attempts to contact shippers for necessary information to expedite package delivery [7]

Core Viewpoint - United Parcel Service (UPS) is facing challenges that may lead to a potential cut in its dividend, despite being one of the highest-yielding stocks in the S&P 500 with a yield of 7.6% [1][2]. Financial Performance - UPS' stock price has decreased by 31.3% year-to-date and 47.7% over the past three years, contributing to the high dividend yield [2]. - The company generated only $742 million in free cash flow (FCF) in its latest quarter, which is insufficient to cover its dividend obligations [7][9]. - For the full year 2025, UPS plans to allocate $5.5 billion for dividends and has already completed $1 billion in share buybacks [6][14]. Strategic Initiatives - UPS is reducing its package delivery volumes with Amazon by 50% by June 2026, aiming to improve margins despite the expected decline in revenue [4][15]. - The company is implementing cost-cutting measures, expecting $3.5 billion in expense reductions through its network reconfiguration and Efficiency Reimagined initiatives [5]. Management and Market Conditions - UPS management has missed guidance for three consecutive years, indicating a need for better adjustment to market conditions [11][12]. - There are concerns regarding the sustainability of the dividend, as analysts forecast free cash flow of only $4.6 billion in 2025, which is below the dividend commitment [14][16]. Long-term Outlook - Despite current challenges, UPS has good long-term growth prospects by focusing on higher-margin deliveries and investing in technology [15].