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UPS Stock Trades Near 52-Week Low: Time to Buy, Sell or Hold?
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Key Takeaways
UPS shares have plunged 34% YTD, lagging industry peers FedEx and GXO Logistics.
The end of the De Minimis exemption has caused shipment backlogs and customer backlash for UPS.
UPS' high dividend payout and weak free cash flow raise questions about dividend sustainability.
United Parcel Service (UPS - Free Report) shares have exhibited a consistent downward trend in recent months and currently trade near the 52-week low. At the closing price of $83.18 as of Oct. 13, the stock trades just 1.4% above the 52-week low of $82.
Year to date, UPS shares have plunged 34%, underperforming the Zacks Transportation—Air Freight and Cargo industry’s decline of 27.5%. Moreover, UPS has been left behind by rival FedEx (FDX - Free Report) and fellow industry player GXO Logistics (GXO - Free Report) . While shares of FedEx have lost 18.4%, those of GXO Logistics have gained 20.7% year to date.
YTD Price Comparison
Image Source: Zacks Investment Research
In view of this disappointing price performance, let's delve deep to find out how investors should approach UPS stock in the current scenario.
Factors Hurting UPS Stock
End of De Minimis Exemption Hits UPS Hard: The De Minimis exemption had expired on Aug. 29. The trade exemption had allowed packages containing goods valued at less than $800 to enter the United States without additional taxes. In July, President Trump signed the executive order to eliminate the exemption. Per a recent NBC News report, the accumulation of packages in UPS warehouses has compelled the company to discard some shipments due to severe customs bottlenecks. UPS is facing customer backlash with allegations that it has been discarding certain international shipments before they reach their intended destinations.
Dividend Sustainability in Question:In February, UPS management announced a 0.6% hike in its quarterly dividend payout to $1.64 per share (annualized $6.56 per share). No doubt this represents UPS’ shareholder-friendly approach, but questions about the sustainability of its dividend arise. United Parcel Service’s elevated dividend payout ratio (the percentage of net income paid out as dividends) of 87% highlights the concern associated with its ability to maintain dividend payouts over the long term.
We remind investors that in the early 2020s, when UPS’ business was flourishing, driven by exponential e-commerce growth during the peak pandemic period, the company made huge dividend payments. Free cash flow has been on a decline since touching a high of $9 billion in 2022.
UPS' elevated dividend payout is hurting its operational flexibility, with free cash flow not even covering the dividend paid in the first half of 2025. During the period, the company only generated $742 million in free cash flow in the first half, yet paid $2.7 billion in dividends.
Demand Slowdown: A Grave Concern: Due to the decline in shipping demand, volumes are being hurt. Lackluster volumes have been hurting UPS’ results. The slowdown in online sales in the United States, apart from the softness of global manufacturing activity, has been hurting the demand scenario. Due to the weakness, average daily volumes (consolidated) have been weak. At UPS, average daily volumes on a consolidated basis have declined 3.8% year over year in the first half of 2025. The tariff-induced uncertainty caused UPS not to give any revenue or operating profit guidance for 2025 while releasing second-quarter 2025 results. In the June quarter, revenues decreased 2.7% year over year.
Southward Earnings Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for UPS’ third-quarter and fourth-quarter 2025 earnings and full-year 2025 and 2026 earnings have moved south.
Image Source: Zacks Investment Research
UPS’ Valuation: A Saving Grace
UPS is currently considered relatively undervalued, trading at a forward 12-month price to sales (P/S) of 0.8X. This figure is lower than its industry average but a tad higher than FedEx’s and GXO Logistics’. UPS, as well as FedEx, currently has a Value Score of A. GXO Logistics has a value score of B.
UPS' P/S Vs. Industry, GXO & FDX
Image Source: Zacks Investment Research
Not an Opportune Time to Bet on UPS Stock
No doubt that UPS’ valuation is attractive. However, headwinds led by the revenue woes are hard to ignore. Moreover, despite its impressive dividend yield, doubts regarding UPS’ dividend sustainability arise.
The current chaotic situation faced by customers due to the backlog of packages at UPS also does not bode well. In view of all these headwinds, UPS currently carries a Zacks Rank #4 (Sell) and looks like a stock to avoid rather than chase.
Image: Bigstock
UPS Stock Trades Near 52-Week Low: Time to Buy, Sell or Hold?
Key Takeaways
United Parcel Service (UPS - Free Report) shares have exhibited a consistent downward trend in recent months and currently trade near the 52-week low. At the closing price of $83.18 as of Oct. 13, the stock trades just 1.4% above the 52-week low of $82.
Year to date, UPS shares have plunged 34%, underperforming the Zacks Transportation—Air Freight and Cargo industry’s decline of 27.5%. Moreover, UPS has been left behind by rival FedEx (FDX - Free Report) and fellow industry player GXO Logistics (GXO - Free Report) . While shares of FedEx have lost 18.4%, those of GXO Logistics have gained 20.7% year to date.
YTD Price Comparison
In view of this disappointing price performance, let's delve deep to find out how investors should approach UPS stock in the current scenario.
Factors Hurting UPS Stock
End of De Minimis Exemption Hits UPS Hard: The De Minimis exemption had expired on Aug. 29. The trade exemption had allowed packages containing goods valued at less than $800 to enter the United States without additional taxes. In July, President Trump signed the executive order to eliminate the exemption. Per a recent NBC News report, the accumulation of packages in UPS warehouses has compelled the company to discard some shipments due to severe customs bottlenecks. UPS is facing customer backlash with allegations that it has been discarding certain international shipments before they reach their intended destinations.
Dividend Sustainability in Question:In February, UPS management announced a 0.6% hike in its quarterly dividend payout to $1.64 per share (annualized $6.56 per share). No doubt this represents UPS’ shareholder-friendly approach, but questions about the sustainability of its dividend arise. United Parcel Service’s elevated dividend payout ratio (the percentage of net income paid out as dividends) of 87% highlights the concern associated with its ability to maintain dividend payouts over the long term.
We remind investors that in the early 2020s, when UPS’ business was flourishing, driven by exponential e-commerce growth during the peak pandemic period, the company made huge dividend payments. Free cash flow has been on a decline since touching a high of $9 billion in 2022.
UPS' elevated dividend payout is hurting its operational flexibility, with free cash flow not even covering the dividend paid in the first half of 2025. During the period, the company only generated $742 million in free cash flow in the first half, yet paid $2.7 billion in dividends.
Demand Slowdown: A Grave Concern: Due to the decline in shipping demand, volumes are being hurt. Lackluster volumes have been hurting UPS’ results. The slowdown in online sales in the United States, apart from the softness of global manufacturing activity, has been hurting the demand scenario. Due to the weakness, average daily volumes (consolidated) have been weak. At UPS, average daily volumes on a consolidated basis have declined 3.8% year over year in the first half of 2025. The tariff-induced uncertainty caused UPS not to give any revenue or operating profit guidance for 2025 while releasing second-quarter 2025 results. In the June quarter, revenues decreased 2.7% year over year.
Southward Earnings Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for UPS’ third-quarter and fourth-quarter 2025 earnings and full-year 2025 and 2026 earnings have moved south.
Image Source: Zacks Investment Research
UPS’ Valuation: A Saving Grace
UPS is currently considered relatively undervalued, trading at a forward 12-month price to sales (P/S) of 0.8X. This figure is lower than its industry average but a tad higher than FedEx’s and GXO Logistics’. UPS, as well as FedEx, currently has a Value Score of A. GXO Logistics has a value score of B.
UPS' P/S Vs. Industry, GXO & FDX
Not an Opportune Time to Bet on UPS Stock
No doubt that UPS’ valuation is attractive. However, headwinds led by the revenue woes are hard to ignore. Moreover, despite its impressive dividend yield, doubts regarding UPS’ dividend sustainability arise.
The current chaotic situation faced by customers due to the backlog of packages at UPS also does not bode well. In view of all these headwinds, UPS currently carries a Zacks Rank #4 (Sell) and looks like a stock to avoid rather than chase.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.