United Parcel Service, Inc. (UPS) | Investment Case

1. Company Snapshot

1.a. Company Description

United Parcel Service, Inc.provides letter and package delivery, transportation, logistics, and related services.It operates through two segments, U.S. Domestic Package and International Package.

The U.S. Domestic Package segment offers time-definite delivery of letters, documents, small packages, and palletized freight through air and ground services in the United States.The International Package segment provides guaranteed day and time-definite international shipping services in Europe, the Asia Pacific, Canada and Latin America, the Indian sub-continent, the Middle East, and Africa.This segment offers guaranteed time-definite express options.

The company also provides international air and ocean freight forwarding, customs brokerage, distribution and post-sales, and mail and consulting services in approximately 200 countries and territories.In addition, it offers truckload brokerage services; supply chain solutions to the healthcare and life sciences industry; shipping, visibility, and billing technologies; and financial and insurance services.The company operates a fleet of approximately 121,000 package cars, vans, tractors, and motorcycles; and owns 59,000 containers that are used to transport cargo in its aircraft.

United Parcel Service, Inc.was founded in 1907 and is headquartered in Atlanta, Georgia.

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1.b. Last Insights on UPS

United Parcel Service, Inc.'s recent performance was driven by a strong Q3 2025 earnings report, which highlighted strategic moves to boost profitability. The company's revenues reached $21.4 billion, surpassing estimates, with an operating profit of $1.8 billion. A positive outlook for the holiday quarter, with expected Q4 revenue of around $24 billion, exceeded Wall Street's consensus estimate. The company's turnaround plan, focusing on higher-margin deliveries and cost-cutting, seems to be taking effect. Additionally, UPS's efforts to shift towards sectors like healthcare logistics and SMBs are underway.

1.c. Company Highlights

Last Price	115.21
Change Percentage	-1.30%
Open	116.17
Previous Close	116.73
Market Cap ( Millions)	97743
Volume	2998192
Year High	123.7
Year Low	82
M A 50	107.26
M A 200	96.48

FCF Yield	4.88%
Dividend Yield	5.69%
ROE	35.12%
Debt / Equity	198.99%
Net Debt / EBIDTA	221.45%
Price To Book	6.03
Price Earnings Ratio	17.55
Price To FCF	20.51
Price To sales	1.1
EV / EBITDA	10.41

2. UPS Delivers Solid Q4 2025 Earnings, Driven by Efficiency Initiatives

United Parcel Service, Inc. (UPS) reported its fourth-quarter 2025 earnings, with consolidated revenue of $24.5 billion, operating profit of $2.9 billion, and operating margin of 11.8%. For the full year 2025, consolidated revenue was $88.7 billion, operating profit was $8.7 billion, and operating margin was 9.8%. The company achieved $3.5 billion in savings from its network reconfiguration and efficiency initiatives. The actual EPS came out at $2.38, beating estimates of $2.2.

Publication Date: Feb -02

                                    📋 Highlights
                                    2025 Full-Year Financials:
                                                Consolidated revenue $88.7B, operating profit $8.7B, operating margin 9.8%.
Amazon Glide Down Impact:
                                                Reduced Amazon volume by 1M pieces/day, targeting $3B savings from reconfiguration.
Operational Efficiency Gains:
                                                $3.5B savings from network reconfiguration and $25M operational hour reductions in 2026.
Cash Flow and Shareholder Returns:
                                                $8.5B cash from operations, $6.4B returned to shareholders via dividends/share buybacks.
Automation Expansion:
                                                68% U.S. volume processed through automated facilities by 2026, driving 28% lower cost per piece.

                                

Segment Performance

The U.S. Domestic segment's operating profit was $4.6 billion, with an operating margin of 7.7% for the full year 2025. The International segment's operating profit was $2.9 billion, with an operating margin of 15.8% for the full year 2025. The Supply Chain Solutions segment's operating profit was $1.1 billion, with an operating margin of 10.6% for the full year 2025. For 2026, revenue growth is anticipated to be in the low single digits year over year for the International segment, driven by a solid increase in revenue per piece.

Guidance and Outlook

UPS expects 2026 consolidated revenue of approximately $89.7 billion and a consolidated operating margin of approximately 9.6%. The company targets $3 billion in savings related to the Amazon glide down and plans to reduce total operational hours by approximately 25 million hours in 2026. As Carol Tomé mentioned, "the company will revisit its long-range targets after 2026, which is a pivotal year for United Parcel Service."

Valuation and Metrics

With a P/E Ratio of 16.18, EV/EBITDA of 10.02, and Dividend Yield of 6.18%, UPS's valuation appears reasonable. The company's ROE is 35.12%, and ROIC is 10.44%, indicating efficient capital allocation. Analysts estimate next year's revenue growth at 4.3%, which is slightly higher than the current year's growth rate. The expected free cash flow yield is 5.29%, which is attractive for income investors.

Operational Efficiency

The company is investing in automation, with 127 automated buildings and 24 more to be added in 2026, resulting in a 28% lower cost per piece. Brian Dykes mentioned that the cost per piece profile will trend down as the year progresses, with a return to a normal inflation level. The company is also financing aircraft through a Burnham lease structure, which will help reduce its CapEx profile.

3. NewsRoom

UPS vs. FDX: Which Parcel Delivery Giant Offers Greater Potential Now?

14:55

Source: zacks.com

Can I get a tariff refund from DHL, UPS, or FedEx after the Supreme Court struck down Trump's tariffs?

13:32

Source: fastcompany.com

Lansforsakringar Fondforvaltning AB publ Grows Position in United Parcel Service, Inc. $UPS

11:05

Source: defenseworld.net

Why I Just Loaded Up on This 5.7%-Yielding Dividend Stock

09:44

Source: fool.com

Prediction: The Stock Market Surge Following the Supreme Court Smackdown of Trump's Tariffs Will Be Short-Lived

Feb -22

Source: fool.com

United Parcel Service (NYSE:UPS) Stock Acquired Rep. Gilbert Ray Cisneros, Jr.

Feb -22

Source: defenseworld.net

Teamsters urge judge to block UPS from offering $150,000 buyouts to drivers

Feb -19

Source: reuters.com

Where Will UPS Be in 1 Year?

Feb -19

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.56%)

6. Segments

U.S. Domestic

Expected Growth: 3.2%

The 3.2% growth in U.S. Domestic segment of United Parcel Service, Inc. is driven by e-commerce demand, increased shipping volumes, and pricing strategies. A recovering economy, more online shopping, and efficient logistics have boosted parcel delivery services. UPS's investments in technology and capacity expansion have also supported this growth.

International

Expected Growth: 4.1%

The international segment growth of 4.1% for United Parcel Service, Inc. is driven by increasing e-commerce demand, expansion in emerging markets, and improved operational efficiency. A recovering global economy and favorable exchange rates also contribute to the growth, as the company benefits from a diversified customer base and a strong logistics network.

Supply Chain Solutions

Expected Growth: 4.5%

The 4.5% growth in Supply Chain Solutions from United Parcel Service, Inc. is driven by increasing demand for logistics and e-commerce, efficient network expansion, and technology investments. Strong performance in freight forwarding, contract logistics, and distribution services also contributed to growth, as businesses seek integrated supply chain solutions to enhance operational efficiency and meet evolving customer needs.

7. Detailed Products

UPS Ground

A cost-effective ground shipping service for packages up to 150 lbs, with delivery in 1-5 business days

UPS 3-Day Select

A fast and affordable shipping service with delivery in 3 business days

UPS 2nd Day Air

A fast and reliable shipping service with delivery in 2 business days

UPS Next Day Air

A fast and reliable shipping service with delivery in 1 business day

UPS Freight

A freight shipping service for large and heavy shipments

UPS Supply Chain Solutions

A comprehensive logistics and supply chain management service

UPS Mail Innovations

A mail and package consolidation service for high-volume shippers

UPS Access Points

A network of convenient and secure locations for package pickup and drop-off

8. United Parcel Service, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for UPS is moderate due to the presence of alternative logistics providers and the increasing popularity of digital marketplaces.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fragmented nature of the market and the lack of concentration among customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers and the ability of UPS to negotiate prices.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including the need for significant capital investment and regulatory compliance.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of established competitors, such as FedEx, and the ongoing competition for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	57.03%
Debt Cost	3.95%
Equity Weight	42.97%
Equity Cost	9.16%
WACC	6.18%
Leverage	132.75%

11. Quality Control: United Parcel Service, Inc. passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

TransDigm Group

A-Score: 7.0/10

Value: 3.0

Growth: 8.0

Quality: 6.7

Yield: 9.0

Momentum: 7.0

Volatility: 8.3

1-Year Total Return ->

PACCAR

A-Score: 6.0/10

Value: 4.1

Growth: 6.7

Quality: 5.0

Yield: 8.0

Momentum: 4.0

Volatility: 8.3

1-Year Total Return ->

Paychex

A-Score: 6.0/10

Value: 2.1

Growth: 5.8

Quality: 9.0

Yield: 7.0

Momentum: 2.5

Volatility: 9.3

1-Year Total Return ->

Caterpillar

A-Score: 5.7/10

Value: 2.0

Growth: 6.9

Quality: 6.2

Yield: 3.0

Momentum: 8.5

Volatility: 7.3

1-Year Total Return ->

UPS

A-Score: 5.4/10

Value: 4.9

Growth: 4.2

Quality: 4.9

Yield: 9.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

FedEx

A-Score: 5.3/10

Value: 5.6

Growth: 5.6

Quality: 4.1

Yield: 4.0

Momentum: 5.0

Volatility: 7.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

1.58%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.18%

United Parcel Service, Inc. - US9113121068

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on UPS

1.c. Company Highlights

Higher Yield

Less Volatile

Stable Momentum

Earnings Beats

Earnings Miss

Revenues Miss

Weak Momentum

Medium Volatility

Higher Growth

Revenues Beats

2. UPS Delivers Solid Q4 2025 Earnings, Driven by Efficiency Initiatives

Segment Performance

Guidance and Outlook

Valuation and Metrics

Operational Efficiency

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.56%)

6. Segments

U.S. Domestic

Expected Growth: 3.2%

International

Expected Growth: 4.1%

Supply Chain Solutions

Expected Growth: 4.5%

7. Detailed Products

UPS Ground

UPS 3-Day Select

UPS 2nd Day Air

UPS Next Day Air

UPS Freight

UPS Supply Chain Solutions

UPS Mail Innovations

UPS Access Points

8. United Parcel Service, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: United Parcel Service, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

115.2$

Current Price

115.2$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA