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United Parcel (UPS)
NYSE:UPS
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United Parcel
(NYSE:UPS)72Outperform
Positive Factors
Financial Performance
UPS reported a solid 4Q adj EPS, beating the street by 9% and our estimate by 5%, as margins exceeded expectations across the board.
Operational Efficiency
UPS rapidly cut costs, resulting in an adj operating margin of 12.3%, 80 bps above estimates.
Negative Factors
Revenue Projections
FY25 revenue is being guided to revenue of $89B, which falls significantly short of the street’s $95B estimate.
United Parcel (UPS) vs. S&P 500 (SPY)
Market Cap
$101.87B
Dividend Yield5.47%
Average Volume (3M)7.14M
Price to Earnings (P/E)17.6
Beta (1Y)0.85
Revenue Growth0.16%
EPS Growth-13.41%
CountryUS
Employees500,000
SectorIndustrials
Sector Strength66
IndustryTransportation
Share Statistics
EPS (TTM)6.76
Shares Outstanding739,873,800
10 Day Avg. Volume5,528,287
30 Day Avg. Volume7,138,052
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.12
Price to Cash Flow (P/CF)7.70
P/FCF Ratio7.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$135.39Price Target Upside15.93% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
United Parcel Business Overview & Revenue Model
Company DescriptionUnited Parcel Service (UPS) is a global leader in logistics and package delivery services, headquartered in Atlanta, Georgia. The company operates in several sectors including domestic and international package delivery, supply chain solutions, freight forwarding, and contract logistics. It provides a wide range of services to businesses and consumers, including next-day air delivery, ground shipping, and international shipping solutions, along with specialized services such as temperature-controlled transportation and e-commerce fulfillment.
How the Company Makes MoneyUPS makes money primarily through its extensive logistics and package delivery networks. The company's revenue model is centered around its three main business segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. The U.S. Domestic Package segment generates revenue by delivering packages within the United States, leveraging a vast network of distribution centers and transportation assets. The International Package segment focuses on deliveries outside the U.S., capitalizing on global trade and the demand for cross-border shipping. The Supply Chain & Freight segment provides logistics and freight services, including transportation, distribution, and freight forwarding, catering to businesses' supply chain needs. Significant partnerships with large e-commerce companies, retailers, and businesses that require reliable shipping and logistics solutions also contribute to UPS's earnings. Additionally, the company benefits from advancements in technology and infrastructure investments that enhance operational efficiency and customer service.
United Parcel Financial Statement Overview
Summary
UPS maintains solid financial health with consistent revenue growth and efficient cash flow generation. Operational profitability shows potential for improvement, while the balance sheet remains stable with manageable leverage.Income Statement
UPS demonstrates strong revenue consistency with a slight revenue increase of 0.12% from 2023 to 2024. The gross profit margin improved significantly to 27.47% in 2024, indicating efficient cost management. However, the net profit margin declined to 6.35%, suggesting room for profitability improvements. The EBIT and EBITDA margins show stability at 9.30% and 11.19%, respectively.75
Positive
Balance Sheet
The company's balance sheet reflects a moderate debt-to-equity ratio of 1.32, indicating manageable leverage. Return on equity declined to 34.57% in 2024, showing a decrease in profitability relative to shareholder equity. The equity ratio is relatively low at 23.86%, suggesting higher reliance on debt financing.70
Positive
Cash Flow
UPS showcases strong cash flow management with a free cash flow growth rate of 22.31% in 2024. The operating cash flow to net income ratio is robust at 1.75, indicating healthy cash generation relative to net income. The free cash flow to net income ratio stands at 1.07, reflecting efficient capital expenditure management.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 91.07B | 90.96B | 100.34B | 97.29B | 84.63B | Gross Profit |
| 25.02B | 17.23B | 13.09B | 12.81B | 7.81B | EBIT |
| 8.47B | 9.14B | 13.09B | 17.27B | 2.64B | EBITDA |
| 11.92B | 12.71B | 17.00B | 15.82B | 10.37B | Net Income Common Stockholders |
| 5.78B | 6.71B | 11.55B | 12.89B | 1.34B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 6.32B | 6.07B | 7.59B | 10.59B | 6.32B | Total Assets |
| 70.07B | 70.86B | 71.12B | 69.41B | 62.49B | Total Debt |
| 22.02B | 26.73B | 23.52B | 25.53B | 27.75B | Net Debt |
| 15.90B | 23.52B | 17.92B | 15.27B | 21.84B | Total Liabilities |
| 53.33B | 53.54B | 51.32B | 55.14B | 61.74B | Stockholders Equity |
| 16.72B | 17.31B | 19.79B | 14.25B | 741.00M |
| Cash Flow | Free Cash Flow | |||
| 6.21B | 5.08B | 9.34B | 10.81B | 5.05B | Operating Cash Flow |
| 10.12B | 10.24B | 14.10B | 15.01B | 10.46B | Investing Cash Flow |
| -217.00M | -7.13B | -7.47B | -3.82B | -5.28B | Financing Cash Flow |
| -6.85B | -5.53B | -11.19B | -6.82B | -4.52B |
United Parcel Technical Analysis
Negative
116.79
Price Trends
120.70
Negative
125.31
Negative
127.21
Negative
Market Momentum
-0.76
Negative
46.62
Neutral
65.19
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UPS, the sentiment is Negative. The current price of 116.79 is above the 20-day moving average (MA) of 114.89, below the 50-day MA of 120.70, and below the 200-day MA of 127.21, indicating a neutral trend. The MACD of -0.76 indicates Negative momentum. The RSI at 46.62 is Neutral, neither overbought nor oversold. The STOCH value of 65.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UPS.
United Parcel Risk Analysis
United Parcel disclosed 22 risk factors in its most recent earnings report. United Parcel reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
United Parcel Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $16.31B | 20.67 | 36.44% | 1.23% | 13.98% | 14.29% | |
72 Outperform | $101.87B | 17.64 | 34.59% | 5.47% | 0.16% | -13.41% | |
70 Outperform | $6.46B | 13.88 | 15.69% | 1.98% | 7.25% | 25.82% | |
66 Neutral | $63.32B | 16.76 | 6.06% | 2.09% | -0.63% | -7.18% | |
65 Neutral | $15.76B | 28.37 | 14.22% | 1.10% | -5.79% | -20.32% | |
63 Neutral | $11.67B | 25.49 | 27.04% | 2.45% | 0.73% | 41.65% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
UPS
United Parcel
116.79
-28.29
-19.50%
CHRW
CH Robinson
98.35
27.74
39.29%
EXPD
Expeditors International
118.13
-1.43
-1.20%
FDX
FedEx
247.74
4.34
1.78%
JBHT
JB Hunt
157.62
-40.21
-20.33%
R
Ryder System
153.39
41.98
37.68%
United Parcel Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -11.45% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive outlook with strong financial performance, particularly in revenue, profit growth, and strategic segment expansions. However, challenges related to pension costs, key customer adjustments, and operational changes with USPS were noted. Despite these challenges, UPS is confident in its strategic initiatives and future growth prospects.Highlights
Revenue and Operating Profit Growth
Consolidated fourth quarter revenue increased 1.5% to $25.3 billion, with operating profit rising 11.2% to $3.1 billion compared to last year. The consolidated operating margin was 12.3%, an increase of 110 basis points.
Strong Full-Year Financial Performance
For 2024, UPS achieved consolidated revenue of $91.1 billion, operating profit of $8.9 billion, and generated $10.1 billion in cash from operations, returning $5.9 billion to shareholders.
Growth in SMB and Healthcare Segments
SMBs made up 28.9% of total U.S. volume, a 30 basis point increase. The digital access program generated $3.3 billion in global revenue, a 17% increase year-over-year. Healthcare logistics business expanded with acquisitions and new facilities.
Efficiency and Automation Initiatives
UPS equipped 66% of its fleet with sensors, eliminating 12 million manual scans per day. 63% of U.S. volume now flows through automated facilities, up from 60% last year.
Lowlights
Non-Cash Pension and Impairment Charges
GAAP results included a non-cash after-tax mark-to-market pension charge of $506 million, asset impairment charges of $46 million, and other costs totaling $639 million.
Challenges with Largest Customer (Amazon)
Reached an agreement to reduce Amazon's volume by more than 50% by 2026 due to diminishing returns. This will result in lower revenue but a shift towards higher-margin business.
Impact of USPS Service Changes
UPS stopped using USPS for SurePost due to increased costs and potential service deterioration, insourcing 100% of SurePost volume. This was driven by USPS changing its operating model.
Company Guidance
During the UPS Fourth Quarter 2024 Earnings Conference Call, several key financial metrics and strategic updates were discussed. For the fourth quarter of 2024, UPS reported a consolidated revenue increase of 1.5% to $25.3 billion, with operating profit rising 11.2% to $3.1 billion, resulting in a consolidated operating margin of 12.3%. The U.S. domestic segment's operating margin exceeded 10%, while international operating margin was 21.6%. For the full fiscal year, UPS achieved a consolidated revenue of $91.1 billion and an operating profit of $8.9 billion, with an operating margin of 9.8%. Cash generated from operations totaled $10.1 billion, with $5.9 billion returned to shareholders through dividends and share repurchases. Guidance for 2025 includes a projected revenue of approximately $89 billion and an operating margin of 10.8%. UPS highlighted strategic changes such as transitioning all SurePost deliveries in-house, aiming to generate $1 billion in savings through Efficiency Reimagined initiatives, and reducing Amazon-related volume by 50% by 2026 to improve profitability, with expectations of a U.S. domestic operating margin of at least 12% by the fourth quarter of 2026.United Parcel Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
UPS Appoints Kevin P. Clark to Board of Directors
Positive
Mar 3, 2025
On March 3, 2025, UPS announced the appointment of Kevin P. Clark, Chairman and CEO of Aptiv PLC, to its Board of Directors, increasing the board size to thirteen members. Clark’s expertise in finance, technology, and industrial transformation is expected to enhance UPS’s strategic areas, particularly in healthcare and technology, as he joins the Audit Committee following the 2025 Annual Meeting of Shareowners.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.