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Revenue Woes Continue to Plague UPS: Is a Turnaround on the Horizon?
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Key Takeaways
UPS revenues fell 1.7% year over year as average daily volumes dropped 3.8% in H1 2025.
UPS cut business with Amazon, planning a 50% volume reduction by June 2026.
UPS shares are down over 30% in 2025, with earnings estimates revised lower in recent months.
United Parcel Service (UPS - Free Report) is currently suffering from revenue weakness as geopolitical uncertainty and high inflation continue to hurt consumer sentiment and growth expectations. The weak demand scenario due to the economic slowdown has also led to a decline in the volume of packages shipped.
Average daily volumes on a consolidated basis declined 3.8% year over year in the first half of 2025. Driven by sluggish volumes, total revenues at UPS fell 1.7% year over year in the first six months of 2025. Volumes are expected to remain subdued at least in the near term. UPS’ decision, taken earlier this year, to trim the business with Amazon (AMZN - Free Report) is likely to keep near-term volumes subdued. UPS’ management had reached an agreement in principle with Amazon to lower the latter’s volume by more than 50% by June 2026. According to Carol Tome, UPS’ chief executive officer, Amazon was not its most profitable customer. We expect the consolidated average daily volumes to decline by 9.4% in 2025 from 2024’s actuals.
The trade-related economic uncertainty adds to UPS’ woes. While releasing its second-quarter 2025 results, UPS did not unveil any revenue or operating profit guidance for 2025, citing macroeconomic uncertainty. Volatility is likely to persist in the U.S. stock market going forward due to uncertainty over the timing of the next interest rate cut, new tariffs and ongoing geopolitical tensions. This is likely to keep UPS’ top line under pressure for at least the rest of the year despite its cost-cutting efforts.
UPS’ rival FedEx (FDX - Free Report) is also cutting costs to combat the weak demand scenario. FedEx reportedly will lay off more than 480 employees as it reshuffles operations through the Network 2.0 initiative. In the second quarter of 2023, FedEx announced DRIVE, a comprehensive program to improve its long-term profitability. The DRIVE program resulted in $1.8 billion in permanent savings in fiscal 2024. The program resulted in further $2.2 billion cost savings in fiscal 2025. These cost reduction initiatives include reducing flight frequencies, parking aircraft and cutting staff.
UPS’ Price Performance, Valuation & Estimates
Shares of UPS have declined in excess of 30% so far this year, underperforming its industry.
YTD Price Comparison
Image Source: Zacks Investment Research
From a valuation standpoint, UPS trades at a 12-month forward price-to-earnings ratio of 12.28X, nearly in line with industrial levels.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for UPS’ third-quarter 2025, fourth-quarter 2025, full-year 2025 and full-year 2026 earnings has been revised downward over the past 60 days.
Image: Bigstock
Revenue Woes Continue to Plague UPS: Is a Turnaround on the Horizon?
Key Takeaways
United Parcel Service (UPS - Free Report) is currently suffering from revenue weakness as geopolitical uncertainty and high inflation continue to hurt consumer sentiment and growth expectations. The weak demand scenario due to the economic slowdown has also led to a decline in the volume of packages shipped.
Average daily volumes on a consolidated basis declined 3.8% year over year in the first half of 2025. Driven by sluggish volumes, total revenues at UPS fell 1.7% year over year in the first six months of 2025. Volumes are expected to remain subdued at least in the near term. UPS’ decision, taken earlier this year, to trim the business with Amazon (AMZN - Free Report) is likely to keep near-term volumes subdued. UPS’ management had reached an agreement in principle with Amazon to lower the latter’s volume by more than 50% by June 2026. According to Carol Tome, UPS’ chief executive officer, Amazon was not its most profitable customer. We expect the consolidated average daily volumes to decline by 9.4% in 2025 from 2024’s actuals.
The trade-related economic uncertainty adds to UPS’ woes. While releasing its second-quarter 2025 results, UPS did not unveil any revenue or operating profit guidance for 2025, citing macroeconomic uncertainty. Volatility is likely to persist in the U.S. stock market going forward due to uncertainty over the timing of the next interest rate cut, new tariffs and ongoing geopolitical tensions. This is likely to keep UPS’ top line under pressure for at least the rest of the year despite its cost-cutting efforts.
UPS’ rival FedEx (FDX - Free Report) is also cutting costs to combat the weak demand scenario. FedEx reportedly will lay off more than 480 employees as it reshuffles operations through the Network 2.0 initiative. In the second quarter of 2023, FedEx announced DRIVE, a comprehensive program to improve its long-term profitability. The DRIVE program resulted in $1.8 billion in permanent savings in fiscal 2024. The program resulted in further $2.2 billion cost savings in fiscal 2025. These cost reduction initiatives include reducing flight frequencies, parking aircraft and cutting staff.
UPS’ Price Performance, Valuation & Estimates
Shares of UPS have declined in excess of 30% so far this year, underperforming its industry.
YTD Price Comparison
From a valuation standpoint, UPS trades at a 12-month forward price-to-earnings ratio of 12.28X, nearly in line with industrial levels.
The Zacks Consensus Estimate for UPS’ third-quarter 2025, fourth-quarter 2025, full-year 2025 and full-year 2026 earnings has been revised downward over the past 60 days.
UPS’ Zacks Rank
UPS currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.