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. Nevertheless, new tariffs may directly affect UPS by increasing costs for customers and possibly decreasing shipping volumes, especially in international trade.
In spite of these obstacles, we consider UPS stock, currently valued at approximately $98, to be an appealing buying opportunity. While there are legitimate concerns regarding the company’s operational performance and financial status—which our assessment of growth, profitability, financial stability, and resilience during downturns indicates as weak—we assert that these challenges are already apparent in the stock’s significantly low valuation. That being said, if you are looking for upside with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative, having outperformed the S&P 500 and delivering returns that exceed 91% since its launch. Additionally, see – Amid AI-Fueled Growth, AVGO Stock’s Valuation Raises Concern
How Does United Parcel Service’s Valuation Look vs. The S&P 500?
When considering what you pay per dollar of sales or profit, UPS stock appears inexpensive relative to the broader market.
- United Parcel Service has a price-to-sales (P/S) ratio of 0.9 compared to a figure of 3.0 for the S&P 500
- Moreover, the company’s price-to-free cash flow (P/FCF) ratio is 9.0 versus 20.5 for the S&P 500
- Lastly, it possesses a price-to-earnings (P/E) ratio of 14.1 compared to the benchmark’s 26.4
How Have United Parcel Service’s Revenues Grown Over Recent Years?
United Parcel Service’s Revenues have slightly decreased over recent years.
- United Parcel Service has experienced its top line decline at an average rate of 2.6% over the past 3 years (in contrast to a 5.5% increase for the S&P 500)
- Its revenues have increased by 1.3% from $90 Bil to $91 Bil in the last 12 months (compared to a growth of 5.5% for the S&P 500)
- Additionally, its quarterly revenues dipped 0.7% to $22 Bil in the most recent quarter from $22 Bil a year earlier (against a 4.8% improvement for the S&P 500)
How Profitable Is United Parcel Service?
United Parcel Service’s profit margins are significantly worse than most companies within the Trefis coverage universe.
Does United Parcel Service Look Financially Stable?
United Parcel Service’s balance sheet appears solid.
- United Parcel Service’s Debt figure was $26 Bil at the end of the most recent quarter, while its market capitalization stands at $84 Bil (as of 6/6/2025). This indicates a moderate Debt-to-Equity Ratio of 31.1% (in comparison with 19.9% for the S&P 500). [Note: A low Debt-to-Equity Ratio is favorable]
- Cash (including cash equivalents) comprises $5.1 Bil of the $68 Bil in Total Assets for United Parcel Service. This results in a moderate Cash-to-Assets Ratio of 7.4% (against 13.8% for the S&P 500)
How Resilient Is UPS Stock During A Downturn?
UPS stock has experienced an impact that was slightly better than the benchmark S&P 500 index during certain recent downturns. Concerned about the repercussions of a market crash on UPS stock? Our dashboard How Low Can United Parcel Service Stock Go In A Market Crash? contains a thorough analysis of how the stock has performed during and after prior market crashes.
Inflation Shock (2022)
- UPS stock declined 41.9% from a peak of $232.11 on 2 February 2022 to $134.83 on 27 October 2023, compared to a peak-to-trough decline of 25.4% for the S&P 500
- The stock is yet to bounce back to its pre-Crisis high
- The highest the stock has reached since then is 162.94 on 17 December 2023 and currently trades at around $98
COVID-19 Pandemic (2020)
- UPS stock decreased 27.4% from a high of $118.61 on 16 January 2020 to $86.17 on 12 March 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500
- The stock fully bounced back to its pre-Crisis peak by 15 July 2020
Global Financial Crisis (2008)
- UPS stock fell 51.1% from a peak of $78.37 on 8 August 2007 to $38.30 on 9 March 2009, compared to a peak-to-trough decline of 56.8% for the S&P 500
- The stock fully returned to its pre-Crisis peak by 13 March 2012
Putting All The Pieces Together: What It Means For UPS Stock
In conclusion, United Parcel Service’s performance across the parameters discussed above is as follows:
- Growth: Neutral
- Profitability: Weak
- Financial Stability: Neutral
- Downturn Resilience: Good
- Overall: Neutral
UPS stock has exhibited moderate performance across the parameters mentioned, and we believe the negative aspects are predominantly already incorporated into the stock price. In fact, we estimate UPS’ Valuation to be $124 per share, indicating over 25% upside potential.
While it appears that there is some upside potential for UPS stock, the Trefis Reinforced Value (RV) Portfolio has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to yield strong returns for investors. Why is that? The quarterly rebalanced mix of large, mid, and small-cap RV Portfolio stocks provided a flexible approach to capitalize on favorable market conditions while mitigating losses when markets decline, as elaborated in RV Portfolio performance metrics.