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	94.92
Change Percentage	0.17%
Open	95
Previous Close	94.76
Market Cap ( Millions)	80532
Volume	3888135
Year High	136.99
Year Low	82
M A 50	90.53
M A 200	96.72

FCF Yield	5.46%
Dividend Yield	6.91%
ROE	34.41%
Debt / Equity	184.61%
Net Debt / EBIDTA	193.68%
Price To Book	5.1
Price Earnings Ratio	14.66
Price To FCF	18.33
Price To sales	0.9
EV / EBITDA	8.89

2. UPS Delivers Strong Q3 Earnings, Driven by Revenue Quality and Cost Efficiencies

UPS reported consolidated revenue of $21.4 billion and operating profit of $2.1 billion in Q3, with a consolidated operating margin of 10%. Diluted earnings per share (EPS) came in at $1.74, significantly beating estimates of $1.29. The strong EPS performance was partly driven by a $0.30 contribution from a sale-leaseback transaction involving 5 properties. Revenue per piece in the U.S. grew by 9.8%, driven by a focus on revenue quality. As Carol Tomé noted, "our focus on revenue quality yielded solid results."

Publication Date: Oct -29

                                    📋 Highlights
                                    Consolidated Revenue & Profit::
                                                Q3 revenue $21.4B, operating profit $2.1B, margin 10%.
U.S. Revenue Quality Growth::
                                                Revenue per piece up 9.8% despite 12.3% volume decline from Amazon.
International Expansion::
                                                4.8% volume growth, $4.7B revenue (up 5.9% YoY), $691M profit.
Cost Reductions::
                                                $2.2B expense cuts to date, $3.5B 2025 target, 21.2% Amazon volume reduction.
Free Cash Flow & Dividends::
                                                $2.7B year-to-date free cash flow, $4B dividends paid in 2025.

                                

Segment Performance

The U.S. Domestic segment saw a decline in average daily volume, primarily due to the "glide down" of Amazon volume, but more premium ground commercial and residential services made up over 84% of total ground average daily volume. International segment delivered its fourth consecutive quarter of growth in average daily volume and revenue, with total international average daily volume increasing 4.8%. Supply Chain Solutions revenue was lower year-over-year, partly due to the divestiture of Coyote in Q3 2024.

Cost Efficiencies and Guidance

UPS has made significant progress in its cost reduction efforts, with $2.2 billion in expense reductions so far this year, and is on track to meet its 2025 target of $3.5 billion. The company expects consolidated revenue of approximately $24 billion and an operating margin of 11% to 11.5% in Q4. With a current P/E Ratio of 14.87 and a Dividend Yield of 6.8%, UPS's valuation suggests a stable income stream, but limited growth expectations. Analysts estimate revenue growth at 0.3% for next year, indicating a relatively flat outlook.

Outlook and Valuation

Given UPS's current valuation metrics, including an EV/EBITDA ratio of 13.73 and an ROE of 34.41%, the stock appears to be fairly priced, with a balance between income generation and growth prospects. The expected continuation of the Amazon "glide down" and further consolidation of buildings may impact future revenue, but the company's efforts to drive efficiency and grow high-value business segments are expected to support long-term profitability.

3. NewsRoom

United Parcel Service (UPS) Recently Broke Out Above the 200-Day Moving Average

Dec -04

Source: zacks.com

FedEx and UPS Face Plane Groundings at the Worst Possible Time

Dec -03

Source: 247wallst.com

Can UPS Stock Beat the Market?

Dec -03

Source: fool.com

Victims' families plan to file wrongful death lawsuit in UPS cargo jet crash

Dec -03

Source: reuters.com

UPS vs. EXPD: Which Dividend-Paying Stock Reigns Supreme Currently?

Dec -02

Source: zacks.com

Top 10 High-Yield Dividend Stocks For December 2025

Dec -01

Source: seekingalpha.com

American Century Value Fund Q3 2025 Contributors/Detractors And Notable Trades

Dec -01

Source: seekingalpha.com

Should You Buy UPS Stock Before 2026?

Nov -30

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: 6.4/10

Value: 3.0

Growth: 7.9

Quality: 6.7

Yield: 9.0

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

PACCAR

A-Score: 6.0/10

Value: 3.7

Growth: 6.7

Quality: 6.1

Yield: 8.0

Momentum: 3.0

Volatility: 8.3

1-Year Total Return ->

Paychex

A-Score: 5.8/10

Value: 1.8

Growth: 5.8

Quality: 9.0

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

Caterpillar

A-Score: 5.6/10

Value: 2.0

Growth: 7.0

Quality: 7.0

Yield: 3.0

Momentum: 7.5

Volatility: 7.3

1-Year Total Return ->

UPS

A-Score: 5.2/10

Value: 5.0

Growth: 4.2

Quality: 4.9

Yield: 9.0

Momentum: 1.0

Volatility: 7.3

1-Year Total Return ->

FedEx

A-Score: 5.1/10

Value: 5.7

Growth: 5.7

Quality: 4.4

Yield: 4.0

Momentum: 3.5

Volatility: 7.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-1.86%

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 Strong Q3 Earnings, Driven by Revenue Quality and Cost Efficiencies

Segment Performance

Cost Efficiencies and Guidance

Outlook and Valuation

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

94.98$

Current Price

94.98$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA