Recently, Zacks.com users have been paying close attention to UPS (UPS). This makes it worthwhile to examine what the stock has in store.
UPS (UPS 3.14%) has struggled in recent quarters due to a challenging market environment and other issues. Tariffs, slowing economic growth, and low margins on volumes from its largest customer, Amazon (AMZN 0.25%), have impacted the leading global logistics company's revenue and cash flow, which has, in turn, weighed on its share price.
United Parcel Service (NYSE:UPS) has notably underperformed against the broader S&P 500 index over the past year, falling nearly 30% compared to the S&P 500's 12% increase. This drop occurs despite UPS's strategic move to minimize lower-margin Amazon deliveries, aimed at boosting profitability.
In the most recent trading session, United Parcel Service (UPS) closed at $99.31, indicating a +1.08% shift from the previous trading day.
United Parcel Service offers a 6.7% dividend yield. With payout ratios rising and the free cash flow falling, its dividend growth may be in doubt.
In the most recent trading session, United Parcel Service (UPS) closed at $98.08, indicating a +0.74% shift from the previous trading day.
WAB edges out UPS courtesy of its dividend sustainability, rising earnings estimates and better price performance so far in 2025.
UPS is oversold, trading near multi-year lows, with Wall Street overly focused on negatives and ignoring operational improvements and cost cuts. Management is aggressively restructuring, targeting $3.5B in cost savings, pivoting to higher-margin healthcare and SMB segments, and maintaining a nearly 7% dividend yield. Valuation is compelling: P/E around 14, EV/EBITDA under 9, and 25–35% upside to fair value if cost cuts and new business lines deliver.
UPS offers a nearly 7% dividend yield, which I believe is safe due to strong free cash flow, despite recent underperformance. Cost-cutting initiatives and domestic margin strength could drive efficiency gains, making current low valuation levels attractive for investors. Valuation is compelling: Even a conservative 15x P/E suggests UPS is undervalued, with upside potential if earnings rebound from cyclical lows.
UPS is trading near Covid lows after a 34% YTD decline. Long-term headwinds include high costs and declining margins, but management is targeting $1B in savings through efficiency initiatives. Revenues are not growing but are stable. There is a risk from the trade war, but as long as the dividend is not cut, the risk/reward ratio is attractive.
UPS (UPS) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.
Logistics startup Stord said Monday that it's buying a UPS subsidiary Ware2Go for an undisclosed amount. The e-commerce logistics startup is trying to compete against the likes of Amazon and make shipping and fulfillment more accessible to smaller companies.