United Parcel Service Inc.

UPS
Financial Analysis · Updated May 12, 2026 · Coverage 2026-Q2
Latest Q Revenue
$21.2B
Q1 2026 · -1.6% YoY
TTM ROIC
11.5%
FY2025 · NOPAT / Invested Capital (NOPAT = Op Income × (1 - 22% tax rate); Invested Capital = Total Assets - Non-interest-bearing CL est. - Cash) · WACC ~9% · Moat spread +2.5pp
Margin Profile
Operating 8.9%
FCF 6.2%
FY2025
Net Debt
$17.9B
Cash $5.8B · Debt $23.7B · Q1 2026

Business Overview

ticker: UPS step: 01 generated: 2026-05-12 source: quick-research

United Parcel Service, Inc. (UPS) — Business Overview

Business Description

UPS is the world's largest package delivery company by revenue, operating across three segments: U.S. Domestic Package, International Package, and Supply Chain Solutions. The company is mid-execution on a multi-year strategic pivot: deliberately "firing" its biggest customer Amazon (cutting volume 50%+ by June 2026 — $5B+ revenue exit) to refocus on premium B2B + Healthcare + International margins. CEO Carol Tomé (since 2020) is leading "Network of the Future" automation alongside the $1.6B Andlauer Healthcare acquisition (closed November 2025). Tomé identifies June 2026 as "the inflection point."

Revenue Model

  • U.S. Domestic Package (~62% of revenue): Next Day Air, 2nd Day Air, Ground, SurePost (legacy)
  • International Package (~19%): Cross-border express, deferred international (220+ countries)
  • Supply Chain Solutions (~19%): Contract logistics, freight forwarding, brokerage, UPS Capital, UPS Healthcare (Andlauer)
  • Domestic margins lower; International higher; Supply Chain healthcare-focused

Products & Services

U.S. Domestic Package
  • Next Day Air, 2nd Day Air, 3 Day Select: Premium express tier
  • Ground: Standard delivery
  • Ground Saver (formerly SurePost): Economy tier with USPS last-mile partnership renewed 2025
  • Returns + UPS Access Point network
  • Differentiated by speed + service quality (vs FedEx, USPS)
International Package
  • Cross-border express in 220+ countries
  • Deferred shipping
  • US-China trade lane (volatile under tariffs)
  • Europe network
Supply Chain Solutions
  • UPS Healthcare: Cold chain, clinical trials logistics, pharmaceutical distribution
  • Andlauer Healthcare Group (closed Nov 2025, $1.6B): Canadian + US healthcare logistics platform
  • Freight Forwarding: Ocean, air, customs brokerage
  • Contract Logistics: Warehousing, fulfillment
  • UPS Capital: Trade finance + insurance
  • Coyote Logistics: Divested (sold to RXO 2024)
Network of the Future
  • 68% of volume through automated facilities by June 2026
  • 28% lower per-piece cost in automated facilities
  • 195 operations + 93 buildings closed in 2025
  • 30,000 additional operational role cuts in 2026

Customer Base & Go-to-Market

  • B2B (target growth): Healthcare, manufacturing, mid-size SMB
  • Amazon (deliberately shrinking): 11.8% of revenue Q1 26; 50%+ reduction by June 2026
  • SMB: Premium tier expansion
  • Healthcare: Pharma, medical devices, clinical trials (highest-margin)
  • Geographic mix: ~75% US, ~25% International

Competitive Position

UPS is #1 US parcel carrier by revenue. Faces FedEx (similar scale), USPS (Last Mile, mail), and Amazon Logistics (in-house). Moats: (1) integrated air + ground network with 100K+ vehicles, (2) Worldport (Louisville) hub + 12 air gateways, (3) deep enterprise B2B relationships, (4) UPS Healthcare cold chain expertise + Andlauer integration. The strategic pivot away from Amazon volume → higher-margin SMB + Healthcare is unique in industry — bears say management is "burning the boats."

Key Facts

  • Founded: 1907 (Seattle, by Jim Casey + Claude Ryan)
  • Headquarters: Atlanta, GA
  • Employees: ~492,000 (going to ~462K post-30K 2026 cuts)
  • Exchange: NYSE
  • Sector / Industry: Industrials / Air Freight & Logistics
  • Market Cap: ~$80B (May 2026)
  • CEO: Carol Tomé (since June 2020, ex-Home Depot CFO)
  • Dividend: $6.56 annual ($1.64 quarterly)
  • 25+ consecutive years of dividend growth
  • Major recent M&A: Andlauer Healthcare $1.6B (Nov 2025)

Financial Snapshot

ticker: UPS step: 04 generated: 2026-05-12 source: quick-research

United Parcel Service, Inc. (UPS) — Financial Snapshot

Income Statement Summary

Metric FY2023 FY2024 FY2025 YoY
Revenue $91.0B $91.1B $89.0B -2%
Adj. Operating Margin 10.9% 9.8% 10.8% +100bps
Adj. Operating Profit $9.9B $8.9B $9.6B +8%
Adj. EPS $8.78 $7.42 $7.07 -5%
Free Cash Flow $5.3B $6.3B $5.5B -13%

Segment Performance (FY2025)

Segment Revenue Op Margin
U.S. Domestic Package ~$55B ~10%
International Package ~$17B ~17-18%
Supply Chain Solutions ~$17B ~9-10%

Q1 2026 Highlights

Metric Q1 2026 YoY
Total Revenue flat
U.S. Domestic Revenue -2.3% volume decline, price +6.5%
International Revenue +3.8% price +10.7%
Supply Chain Revenue -6.5% Mail Innovations drag
EPS beat estimates transition costs pressure margin

Amazon "Glide-Down"

Metric Value
Amazon FY24 % of revenue 11.8%
Volume reduction by June 2026 50%+
Daily volume removed ~2M pieces per day
Revenue exit (cumulative) $5B

Network of the Future Progress

Metric Status
Volume through automated facilities (target June 2026) 68%
Per-piece cost reduction in automated facilities -28%
Operations closed FY25 195
Buildings closed FY25 93
Labor hours removed FY25 26.9M
Operational role cuts FY25 48K
Operational role cuts planned FY26 30K additional
Additional facilities closing by June 2026 24
Total savings FY25 $3.5B

Andlauer Acquisition (November 2025)

Metric Value
Deal value $1.6B
Strategic target $20B healthcare revenue by late 2026

Cash Flow & Balance Sheet (FY2025)

Metric Value
Operating Cash Flow ~$10B
Capital Expenditures ~$4.0B
Free Cash Flow $5.5B
Cash & Equivalents ~$6B
Total Debt ~$22B
Net Debt/EBITDA ~1.5x

Key Ratios (approximate, May 2026)

  • P/E (forward): ~13x | EV/EBITDA: ~9x | Dividend Yield: ~7.3%
  • LTM Payout Ratio | 96.9% (tight — bear concern)
  • FCF Yield: ~7%

Growth Profile

2026 is the "trough year" per CEO Tomé. EPS $7.07 (FY25) represents post-Amazon-glide-down baseline. Bull case: June 2026 inflection, then EPS growth in 2027+ as automated network + higher-margin mix kicks in. Andlauer + UPS Healthcare target $20B healthcare revenue. International margins (~17-18%) lead segment profitability.

Forward Estimates

  • FY2026E Revenue: ~$88-90B (flat — Amazon glide-down mostly absorbed)
  • FY2026E Adj EPS: ~$7.00-7.20 (trough)
  • FY2027E EPS: ~$8.50 (+20% recovery)
  • FY2028E EPS: ~$10 (network + healthcare scale)
  • 65% Long-term Upside Target (TIKR): $130+

Capital Return

  • Dividend $6.56 annual (~$5.6B paid) — 7.3% yield
  • 25+ consecutive years of dividend growth (no cut)
  • Buybacks paused for cost focus
  • Total return: heavily dividend-driven

Deeper Financial Analysis

The fundamental tier adds 9 additional research dimensions for $UPS.

Revenue Breakdown
Segment revenue, geographic mix, product-line contribution margins, and cohort dynamics.
Financial Trends
Quarter-over-quarter momentum, leading indicators, and inflection point analysis.
Balance Sheet
Debt structure, liquidity runway, dilution risk, and working capital dynamics.
Capital Allocation
Buyback cadence, M&A appetite, dividend policy, and reinvestment priorities.
Returns on Capital (ROIC)
Multi-year ROIC vs. WACC, marginal returns on reinvestment, sales-to-invested-capital efficiency, and moat spread.
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