UPS: A Parcel of Wit and Woe

by

United Parcel Service, that venerable titan of brown-clad logistics, finds itself in a rather unflattering position-hovering below $90 per share. One might say it’s the financial equivalent of being caught at a cocktail party wearing last season’s dinner jacket. And yet, there is something oddly compelling about this dowdy state of affairs. After all, even the most jaded trader cannot help but raise an eyebrow at a dividend yield flirting with 7.5%. Is this an opportunity wrapped in twine, or merely a parcel of trouble tied up with string?

Let us pour ourselves a dry martini, adjust our monocles, and examine whether UPS deserves a place in our portfolio-or if it should be sent back to sender.

Loading widget...

A Business Caught Between Shipments

The second quarter results were not so much a disaster as they were a dreadful bore. Revenue slipped for the fourth time in five quarters, settling at $21.2 billion-a reduction of nearly 3% from the previous year. Earnings per share? Lighter than one would hope, with net income sliding by almost 9%. It’s enough to make one yawn into their champagne flute.

Volume trends tell much the same story. The repeal of the de minimis exemption has left UPS’s once-lucrative China-to-U.S. express lanes looking rather threadbare. Those shipments have plummeted by approximately 35%, which is hardly the sort of news one wishes to hear while nibbling on canapés. Empty aircraft are never chic, darling.

And then there’s the competition. Amazon and Walmart seem determined to steal the spotlight with their in-house delivery networks, while regional couriers nip at UPS’s heels like particularly persistent terriers. Yes, the total addressable market for parcels grew by 4% in 2024-but alas, UPS’s slice of the pie appears to be shrinking faster than ice cubes in August.

An Attempt at Sartorial Streamlining

But wait! There is a glimmer of hope amidst this sartorial sagging. UPS, bless its heart, knows it must adapt or perish. Enter “Efficiency Reimagined,” a plan so audacious it could only be dreamed up during a boardroom meeting where everyone was slightly tipsy. The company intends to eliminate 20,000 jobs, shutter 73 facilities, and focus on higher-margin segments. Earlier this year, it made the bold decision to distance itself from Amazon-a client whose volume was impressive but whose margins were thinner than a wafer biscuit.

Tariffs remain tiresome, of course, but UPS seems intent on pivoting strategically. Its China-to-rest-of-world shipments rose by more than 22.4% last quarter, while India-to-Europe traffic nearly doubled. Not exactly a triumph, but certainly a step in the right direction. Healthcare logistics, too, offers a ray of sunshine. Shipping pharmaceuticals and vaccines may lack the glamour of holiday gifts, but it is steady work-and often quite lucrative. Witness the $1.6 billion acquisition of Andlauer Healthcare Group, a move that suggests UPS sees this sector as a potential lifeline.

Patient Capitalism (With Dividends)

Will UPS stage a dramatic comeback anytime soon? Unlikely. Tariff headwinds, coupled with low consumer confidence and a dearth of guidance, paint a picture best described as “tediously challenging.” Investors tempted solely by that luscious dividend would do well to remember that patience is a virtue-and sometimes a necessity.

That said, UPS does appear undervalued. Trading at roughly 13 times trailing earnings, it sits below its historical average. Such pricing reflects considerable uncertainty, yes, but also leaves room for upside should margins stabilize. For those with the temperament of a long-term investor, purchasing a global logistics leader at this multiple-with such a generous yield-might just prove to be a decision worth raising a glass to. Cheers, darling 🍸.

Read More

2025-08-14 15:48