Is UPS a Steal Under $90? Here’s What the Charts Say
Wall Street's latest discount bin darling—UPS stock—is flashing a buy signal under $90. But is this a value trap or a legit opportunity?
Let's break it down.
The Bull Case: At these levels, UPS trades at a P/E ratio that'd make a value investor drool. Global logistics demand isn't disappearing anytime soon, and those iconic brown trucks still move 6% of US GDP daily.
The Bear Trap: Last quarter's earnings showed cracks in the armor—labor costs up 9%, e-commerce volumes slipping. And let's be real: when was the last time a legacy operator out-innovated Amazon?
The Bottom Line: This could be a classic 'buy when there's blood in the streets' play... or just another boomer stock slowly getting Amazon'd into oblivion. Your move, cowboy.
A business in limbo
Let's start with the rough part: the second quarter. It wasn't a disaster, but it wasn't the kind that gets investors fired up either. Revenue slipped for the fourth time in five quarters, landing at $21.2 billion, down nearly 3% from last year. Profits fell faster than sales, with earnings per share coming in light and net income sliding almost 9%.
Volume trends told about the same story. The repeal of the de minimis exemption -- which once let low-value imports from China pass through without duties -- has hurt the China-to-U.S. express lanes, one of UPS's highest-margin routes. Those shipments are down about 35% year over year, which not only hurts sales but can also leave expensive aircraft with underutilized space.
Zooming out a bit, it's clear that the competitive landscape isn't helping either. Both and are eating market share with in-house delivery networks. Regional couriers are also becoming both faster and cheaper. The total addressable market is growing -- parcel volumes reached about $24 billion in 2024, an increase of 4% -- but UPS's slice is shrinking.
These aren't numbers any UPS investors wants to hear. And yet they don't tell the full story.
Image source: Getty Images.
UPS's business is getting leaner
Here's the thing: UPS knows it needs to change. And it's already making cuts to strengthen its balance sheet. The company has already announced plans to eliminate 20,000 jobs, close 73 facilities, and refocus on higher-margin segments of its business per its "Efficiency Reimagined" plan. Earlier this year, the company made the crucial decision to pull back from Amazon, a high-volume client but with thin margins on per-package deliveries.
True, high tariffs are likely going to test whatever margin gains UPS can eke out. But the company is shifting gears. Its China-to-rest-of-world shipments, for example, climbed more than 22.4% last quarter, while India-to-Europe nearly doubled. It's not a full offset (and management isn't pretending that is it). But its a strategic pivot that helps profit MOVE in the right direction when a core lane goes cold.
Healthcare logistics is another bright spot. It's the kind of business that doesn't rise and fall with holiday shopping or the latest import policy. Demand for shipping pharmaceuticals, vaccines, and other medical products is steady, often super urgent, and almost always high margin. The company's $1.6 billion agreement to acquireearlier this year is a clear signal that UPS sees this lane as a potential growth engine.
Patience required (dividends included)
UPS isn't likely going to stage a dramatic rebound anytime soon. Tariff headwinds mixed with low consumer confidence and a lack of guidance is a recipe for caution, and investors shouldn't overlook those problems because their eyes are fixed on that juicy dividend.
At the same time, UPS looks severely undervalued. It currently trades at roughly 13 times trailing earnings, which is below its historical average. That pricing bakes in a lot of near-term uncertainty as well as leaves room for upside if margins stabilize. For long-term investors, buying a global logistics leader at this kind of multiple, with this kind of yield, is the sort of math that can work out over a patient horizon.
