Key Stats for $UPS Stock
- Price Change for $UPS stock: 8%
- Current Share Price as of Oct. 28: $96
- 52-Week High: $139
- $UPS Stock Price Target: $99
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What Happened?
United Parcel Services (UPS) stock jumped 8% on Tuesday after the company crushed earnings expectations and showed its turnaround plan is working faster than expected.
UPS posted adjusted earnings of $1.74 per share for the third quarter, easily beating analyst estimates of $1.30 per share.
Revenue came in at $21.42 billion, ahead of the $20.84 billion Wall Street expected. The company also provided upbeat fourth-quarter guidance, calling for revenue of around $24 billion and an operating margin between 11% and 11.5%.
UPS revealed it cut 34,000 operational jobs this year, far more than its previous estimate of 20,000. Further, UPS trimmed another 14,000 management positions, allowing the logistics giant to expand the bottom line.
CEO Carol Tomé said UPS is “executing the most significant strategic shift in our company’s history.” UPS has saved $2.2 billion so far this year through its restructuring program and expects to hit $3.5 billion in total cost savings by year-end.
Much of the workforce reduction ties back to UPS pulling away from Amazon, which used to be its largest customer.
Amazon volume with UPS dropped 21.2% in the third quarter, steeper than the 13% decline in the first half. UPS is intentionally stepping back from this low-margin business and reshaping its network to focus on higher-value customers.
UPS also closed 93 buildings through September and completed a sale-leaseback deal on five properties, generating a $330 million gain.
All of this is part of UPS’s “Network of the Future” initiative—basically modernizing operations while cutting costs.
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What the Market Is Telling Us About UPS Stock
The 8% surge in UPS stock shows investors are relieved the turnaround strategy is gaining traction. The company has been reshaping its business for months, and this quarter provided proof that the painful restructuring is starting to pay off.
UPS revenue per piece in the U.S. grew 9.8% year-over-year—the strongest growth in three years. That’s huge because it shows UPS is successfully shifting toward more profitable shipments.
Even as total package volume fell 12.3%, UPS managed to grow its operating margin by 10 basis points thanks to better pricing and tight cost control.
The customer mix is improving as small- and medium-sized businesses now account for 32.8% of total U.S. volume, up 340 basis points from last year.
Business-to-business shipments represent 45.2% of volume, up 350 basis points. These are higher-margin customers compared to the low-priced e-commerce packages UPS is walking away from.
For UPS stock, the Amazon exit is clearly a calculated move. While losing 21% of Amazon’s volume sounds scary, that business was dragging down profitability. By closing buildings and cutting headcount in line with the volume decline, UPS is protecting margins while freeing up capacity for more profitable customers.
Management said the Amazon glide-down is three-quarters of the way through a six-quarter plan. That means more volume will come out through the first half of next year.
But the cost cuts are keeping pace, and UPS has already deployed automation in 35 facilities this year to boost efficiency. By the fourth quarter, 66% of volume will move through automated processes, up from 63% last year.
The international business had a tougher quarter, with volume growing 4.8%, but trade lane shifts hurt profitability.
Exports from China to the U.S. dropped 27% due to tariff changes, and that’s one of UPS’s most profitable routes. Volume shifted to lower-margin lanes instead, pressuring international operating margins.
The elimination of the de minimis exemption also created challenges, as the loophole allowed small packages to enter the U.S. duty-free.
When it went away, UPS saw a tenfold surge in daily customs entries, and the company handled it by deploying AI-powered customs processing that now clears 90% of entries automatically.
Still, the policy change cost UPS about $60 million in the third quarter, primarily from reduced China-to-U.S. volume.
CFO Brian Dykes said the direct impact from tariffs and de minimis changes will be $75 million to $100 million in the fourth quarter. That’s manageable, but it shows how volatile the trade environment has become. FedEx, for comparison, took a $150 million hit from global trade headwinds last quarter.
On a positive note, UPS is making progress on a new deal with the U.S. Postal Service. CEO Tomé said they’ve reached a preliminary agreement for USPS to handle final-mile delivery on UPS’s Ground Saver product.
UPS would handle the middle-mile work, and USPS would complete the final leg to homes. That should improve margins on lower-priced residential packages.
The company is also acquiring Andlauer Healthcare Group, a Canadian healthcare logistics provider, for an undisclosed amount. The deal is expected to close in early November and supports UPS’s push to dominate complex healthcare logistics.
Healthcare has been a bright spot, with strong revenue growth in the quarter driven by specialized solutions such as temperature-controlled shipping.
For UPS stock, peak season will be the next test. The company says its top 100 customers are forecasting a good holiday season with a surge of about 60% above current volume levels—similar to the past three years.
Small business forecasts are slightly softer but still solid, and UPS expects one extra delivery day this year compared to last, giving it more flexibility.
Management emphasized that all the automation and network changes position UPS to run its most efficient peak ever. The company won’t need as many seasonal workers, leased vehicles, or rented aircraft as in prior years.
If UPS delivers industry-leading service while keeping costs low, that could validate the entire turnaround thesis.
UPS is in the middle of a massive transformation while navigating unpredictable tariff policies. The Amazon volume decline continues through mid-2026, so there’s more disruption ahead.
And while margins are improving, UPS still needs to prove it can sustain growth as it moves upmarket toward more complex, higher-value customers.
UPS generated $2.7 billion in free cash flow year-to-date and expects the fourth quarter to be similar to the third.
With a strong balance sheet and $5 billion in cash expected by year-end, UPS has ample liquidity to fund its transformation while paying its $5.5 billion annual dividend.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
