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Is UPS Worth Betting on Post the Unveiling of Holiday Hiring Plans?
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Key Takeaways
UPS plans to hire over 100,000 seasonal workers to handle rising holiday demand with RFID-enabled tracking.
UPS is focusing on higher-margin deliveries, healthcare logistics and automation to boost long-term profit.
Weak shipping volumes, elevated fuel costs and a frozen dividend make UPS less attractive for new investors.
Last week, United Parcel Service (UPS - Free Report) announced it will hire more than 100,000 seasonal employees to meet the anticipated demand surge during the upcoming holiday season. The company said it will offer competitive pay, flexible shifts to fit various schedules and a path to a permanent job.
UPS’s Radio Frequency Identification or RFID-enabled tracking technology plays a vital role in ensuring reliable service by providing more accurate, real-time visibility into packages as they move across its network. The company expects to handle more than 4 billion RFID-enabled packages by the end of the current year. The seasonal recruitment program will support operations during the busiest period (generally November to January) for parcel delivery companies like UPS and FedEx (FDX - Free Report) .
The question that now naturally arises is whether investors should bet on UPS stock following the announcement of hiring seasonal workers for the busy holiday season ahead. Let's delve deep to answer the question.
Factors Working in Favor of UPS
E-Commerce Still a Force to Reckon With: Growth has normalized from pandemic highs, but online shopping continues to favor convenient shipping and returns. UPS is using its Digital Access Program (“DAP”) and RFID-enabled tools to deepen SMB and B2B relationships. In second-quarter 2026, global DAP revenues reached $1.4 billion, which marks a third consecutive quarter above $1 billion, while B2B DAP average daily volume rose 34% year over year. RFID at customer origin now covers more than 2.2 million pieces per day, supporting retention and revenue quality.
Expansion Efforts Bode Well: UPS continues to invest in network reach as trade lanes and premium supply chains shift. In 2025, it added weekend delivery in Europe, while a new Philippines air hub is slated to open toward the end of 2026 and a Hong Kong expansion is planned for 2028. Management expects full-year 2026 International revenues to grow in the mid-single digits with a mid-teens operating margin.
As part of its expansion efforts, in November, UPS completed its acquisition of Canadian supply-chain company Andlauer Healthcare Group for $1.6 billion (C$2.2 billion). The transaction valued Andlauer at C$55 per share in cash for its shareholders.
The deal strengthens UPS’ footprint in the complex healthcare logistics space. With Andlauer’s specialized cold-chain infrastructure and expertise added to its network, UPS Healthcare customers are expected to benefit from shorter transit times, improved end-to-end visibility, expanded global reach and enhanced quality assurance standards.
Focus on Higher-Yielding Deliveries: UPS completed its Amazon (AMZN - Free Report) glide down in second-quarter 2026 after eliminating about 2 million lower-yielding pieces per day and removing roughly $4.5 billion of related expense over 18 months. By quarter-end, 68.5% of U.S. volume flowed through automated buildings compared with 64% a year earlier, where cost per piece is about 28% lower than in non-automated buildings. Full-year 2026 U.S. Domestic margin is guided near 7.5%.
We remind investors that last year, UPS management reached an agreement in principle with Amazon to cut the latter’s shipping volume by more than 50% by June 2026. As noted by the company's CEO, Carol B. Tomé, Amazon was not among UPS’ most profitable customers.
Impressive Earnings History: UPS has exceeded the Zacks Consensus Estimate in each of the past four quarters. Its average earnings beat over this period stands at 12.4%.
UPS is seeing consistent improvement, largely supported by increased focus on healthcare revenues and efficiencies driven by artificial intelligence, but its near-term outlook remains somewhat uneven. The strategy shift by the shipping giant has resulted in U.S. average daily volume declining 3.3% and International average daily volume falling 5.8% year over year, while U.S. B2B volume decreased 3.2%. Management expects third-quarter 2026 U.S. average daily volume to decline in the mid-single digits, reflecting seasonality and the Amazon comparison.
Owing to the strategic shift, UPS has not increased the quarterly dividend this year, freezing it at $1.64 per quarter ($6.56 annually). UPS’ CFO Brian Dykes has confirmed this and the freeze, which is sure to raise questions about its short-term financial flexibility. The company’s high dividend payout ratio raises concerns about dividend sustainability and is well above its long-term target of 50-60%. In the event of the company failing to put an end to its struggles through the strategic shift, the high payout ratio may lead to a dividend cut, which would be disastrous for dividend investors.
The conflict between Iran and the United States has led to a sharp increase in oil prices, putting pressure on transportation companies like UPS. Since fuel is a major cost component for such businesses, higher prices directly impact profitability.
Price Performance & Estimates
UPS’ shares have declined year to date, underperforming its industry as well as FedEx. In fact, FedEx’s shares have gained, albeit marginally, so far this year, mainly due to its cost-cutting efforts.
YTD Price Comparison
Image Source: Zacks Investment Research
See how the Zacks Consensus Estimate for UPS’ earnings has been revised over the past 90 days.
Image Source: Zacks Investment Research
Our Take: Don’t Buy UPS Stock Now
UPS’ long-term prospects are improving as it shifts focus from low-margin volumes to higher-margin businesses, particularly small and medium-sized enterprises and healthcare logistics. The company’s cost-reduction initiatives are also expected to support profitability and strengthen its long-term investment appeal.
However, the near-term outlook remains mixed. Elevated fuel costs, weak volumes, the 2026 dividend freeze and external uncertainties could weigh on earnings momentum in the coming quarters. At current levels, the stock’s risk-reward profile appears insufficiently attractive for fresh investment. Existing shareholders may be better off holding their positions while monitoring progress on cost optimization and AI-driven business transformation.
View the Zacks #1 Rank List
Image: Bigstock
Is UPS Worth Betting on Post the Unveiling of Holiday Hiring Plans?
Key Takeaways
Last week, United Parcel Service (UPS - Free Report) announced it will hire more than 100,000 seasonal employees to meet the anticipated demand surge during the upcoming holiday season. The company said it will offer competitive pay, flexible shifts to fit various schedules and a path to a permanent job.
UPS’s Radio Frequency Identification or RFID-enabled tracking technology plays a vital role in ensuring reliable service by providing more accurate, real-time visibility into packages as they move across its network. The company expects to handle more than 4 billion RFID-enabled packages by the end of the current year. The seasonal recruitment program will support operations during the busiest period (generally November to January) for parcel delivery companies like UPS and FedEx (FDX - Free Report) .
The question that now naturally arises is whether investors should bet on UPS stock following the announcement of hiring seasonal workers for the busy holiday season ahead. Let's delve deep to answer the question.
Factors Working in Favor of UPS
E-Commerce Still a Force to Reckon With: Growth has normalized from pandemic highs, but online shopping continues to favor convenient shipping and returns. UPS is using its Digital Access Program (“DAP”) and RFID-enabled tools to deepen SMB and B2B relationships. In second-quarter 2026, global DAP revenues reached $1.4 billion, which marks a third consecutive quarter above $1 billion, while B2B DAP average daily volume rose 34% year over year. RFID at customer origin now covers more than 2.2 million pieces per day, supporting retention and revenue quality.
Expansion Efforts Bode Well: UPS continues to invest in network reach as trade lanes and premium supply chains shift. In 2025, it added weekend delivery in Europe, while a new Philippines air hub is slated to open toward the end of 2026 and a Hong Kong expansion is planned for 2028. Management expects full-year 2026 International revenues to grow in the mid-single digits with a mid-teens operating margin.
As part of its expansion efforts, in November, UPS completed its acquisition of Canadian supply-chain company Andlauer Healthcare Group for $1.6 billion (C$2.2 billion). The transaction valued Andlauer at C$55 per share in cash for its shareholders.
The deal strengthens UPS’ footprint in the complex healthcare logistics space. With Andlauer’s specialized cold-chain infrastructure and expertise added to its network, UPS Healthcare customers are expected to benefit from shorter transit times, improved end-to-end visibility, expanded global reach and enhanced quality assurance standards.
Focus on Higher-Yielding Deliveries: UPS completed its Amazon (AMZN - Free Report) glide down in second-quarter 2026 after eliminating about 2 million lower-yielding pieces per day and removing roughly $4.5 billion of related expense over 18 months. By quarter-end, 68.5% of U.S. volume flowed through automated buildings compared with 64% a year earlier, where cost per piece is about 28% lower than in non-automated buildings. Full-year 2026 U.S. Domestic margin is guided near 7.5%.
We remind investors that last year, UPS management reached an agreement in principle with Amazon to cut the latter’s shipping volume by more than 50% by June 2026. As noted by the company's CEO, Carol B. Tomé, Amazon was not among UPS’ most profitable customers.
Impressive Earnings History: UPS has exceeded the Zacks Consensus Estimate in each of the past four quarters. Its average earnings beat over this period stands at 12.4%.
United Parcel Service Price and EPS Surprise
United Parcel Service price-eps-surprise | United Parcel Service Quote
Near-Term Headwinds Persist
UPS is seeing consistent improvement, largely supported by increased focus on healthcare revenues and efficiencies driven by artificial intelligence, but its near-term outlook remains somewhat uneven. The strategy shift by the shipping giant has resulted in U.S. average daily volume declining 3.3% and International average daily volume falling 5.8% year over year, while U.S. B2B volume decreased 3.2%. Management expects third-quarter 2026 U.S. average daily volume to decline in the mid-single digits, reflecting seasonality and the Amazon comparison.
Owing to the strategic shift, UPS has not increased the quarterly dividend this year, freezing it at $1.64 per quarter ($6.56 annually). UPS’ CFO Brian Dykes has confirmed this and the freeze, which is sure to raise questions about its short-term financial flexibility. The company’s high dividend payout ratio raises concerns about dividend sustainability and is well above its long-term target of 50-60%. In the event of the company failing to put an end to its struggles through the strategic shift, the high payout ratio may lead to a dividend cut, which would be disastrous for dividend investors.
The conflict between Iran and the United States has led to a sharp increase in oil prices, putting pressure on transportation companies like UPS. Since fuel is a major cost component for such businesses, higher prices directly impact profitability.
Price Performance & Estimates
UPS’ shares have declined year to date, underperforming its industry as well as FedEx. In fact, FedEx’s shares have gained, albeit marginally, so far this year, mainly due to its cost-cutting efforts.
YTD Price Comparison
See how the Zacks Consensus Estimate for UPS’ earnings has been revised over the past 90 days.
Our Take: Don’t Buy UPS Stock Now
UPS’ long-term prospects are improving as it shifts focus from low-margin volumes to higher-margin businesses, particularly small and medium-sized enterprises and healthcare logistics. The company’s cost-reduction initiatives are also expected to support profitability and strengthen its long-term investment appeal.
However, the near-term outlook remains mixed. Elevated fuel costs, weak volumes, the 2026 dividend freeze and external uncertainties could weigh on earnings momentum in the coming quarters. At current levels, the stock’s risk-reward profile appears insufficiently attractive for fresh investment. Existing shareholders may be better off holding their positions while monitoring progress on cost optimization and AI-driven business transformation.
UPS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.