UPS Declines More Sharply Than the Overall Market: Key Insights for Investors
UPS Stock Performance: United Parcel Service (UPS) shares fell 1.57% to $82.58, underperforming against the S&P 500, which lost 0.5%. Over the past month, UPS has declined 4.51%, contrasting with the S&P 500's gain of 2.74%.
Earnings Expectations: Analysts anticipate UPS will report earnings of $1.33 per share, reflecting a 24.43% year-over-year decline, with projected revenue of $20.86 billion, a 6.23% decrease from the previous year. The full-year estimates suggest earnings of $6.5 per share and revenue of $87.5 billion, indicating significant declines.
Analyst Ratings and Valuation: UPS currently holds a Zacks Rank of #4 (Sell), with a recent downward revision of 0.41% in EPS estimates. Its Forward P/E ratio is 12.91, slightly below the industry average of 12.95, and it has a PEG ratio of 1.55, matching the industry average.
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UPS Reports Strong Q4 Earnings, Raises 2026 Revenue Forecast
- Earnings Beat: UPS reported Q4 2025 revenue of $24.5 billion and adjusted EPS of $2.38, surpassing the $2.20 estimate, indicating robust market performance.
- 2026 Outlook: The company forecasts 2026 revenue of approximately $89.7 billion, exceeding the $87.938 billion analyst estimate, with a non-GAAP adjusted operating margin of about 9.6%, highlighting future growth potential.
- Cost-Cutting Strategy: UPS cut $3.5 billion in costs in 2025 and plans an additional $3 billion in savings for 2026, including 30,000 job cuts and 24 facility closures to address Amazon volume losses and external challenges.
- Capex Adjustment: UPS aims to reduce 2026 capital expenditures to $3 billion from $3.7 billion in 2025, primarily by converting 15 B767 aircraft purchases to leases, saving $1.5 billion in cash flow.

UPS Automates to Tackle Competitive Challenges
- Network Reduction Strategy: UPS is downsizing its U.S. facility network to address the decline in Amazon package volume, which, while hurting revenue in the short term, allows for significant cost savings by eliminating high maintenance expenses associated with older facilities.
- Automation Deployment Impact: To date, UPS has implemented various automated systems across 127 facilities, with 57% of packages processed through automated facilities in 2023, a figure expected to rise to 68% by the end of 2026, significantly lowering per-package handling costs.
- Layoff Plans: UPS plans to cut 48,000 positions in 2025 and another 30,000 in 2026, primarily through attrition and a voluntary separation program for full-time drivers, aligning workforce size with increased operational efficiency from automation.
- Long-Term Growth Outlook: Although UPS's revenue is declining due to the reduction of low-margin packages, the automation strategy is expected to lower costs, with analysts projecting adjusted earnings per share of $7.12 by 2026, indicating potential for future growth and margin expansion.






