Latest news with #CarolTomé
Yahoo
02-08-2025
- Business
- Yahoo
Should You Buy UPS Stock While It's Below $90?
Key Points UPS' juicy dividend appears to be sustainable. The company's current headwinds should be temporary. UPS' long-term growth prospects remain solid. 10 stocks we like better than United Parcel Service › United Parcel Services (NYSE: UPS) hasn't delivered the goods for investors this year. The stock continued its downward slide following a disappointing second-quarter update on July 29, 2025. UPS' share price is now more than 30% year to date. Should you buy UPS stock while it's below $90? Here are four reasons why I think the answer is a resounding "yes" -- at least, for income investors. 1. The dividend is still "rock solid." One positive side effect of UPS' dismal stock performance for income investors is that its dividend yield has increased. The stock's forward dividend yield currently stands at 7.38%. But is the company's juicy dividend sustainable? UPS CEO Carol Tomé thinks so. She stated in the company's Q2 earnings call: UPS is rock-solid strong, and so is our dividend. The UPS dividend is backed by solid free cash flow and a strong investment-grade balance sheet. We know how important the dividend is to our investors, and you have our commitment to a stable and growing dividend. Two key takeaways from that statement should be reassuring to income investors. First, UPS continues to have the financial flexibility to fund its dividend. Tomé was right that the company has sufficient free cash flow to back the dividend. Second, management is committed to the dividend program. 2. Current headwinds should be only temporary. UPS' business admittedly faces challenges. However, I think the current headwinds should be only temporary. For example, Tomé noted in the Q2 earnings call that the small package market in the U.S. was negatively impacted by U.S. consumer sentiment near all-time lows. Long-term investors and economic observers, though, know that consumer sentiment doesn't stay at such low levels indefinitely. What's the chief culprit behind this low consumer sentiment? Uncertainty surrounding the Trump administration's tariffs. UPS reported that increased tariffs and the elimination of the de minimis exemption caused its China-to-U.S. average daily volume to sink 34.8% in May and June. This is the company's most profitable trade lane. But as Tomé pointed out, "Trade doesn't stop, it moves." In Q2, UPS' volume between China and the rest of the world increased by 22.4%. 3. The Amazon glide-down should boost profitability. UPS' move to cut its Amazon (NASDAQ: AMZN) shipment volume by 50% was controversial. However, it should boost profitability over the long run. Tomé said in the Q2 call that the Amazon glide-down is on track for the most part. The one exception is that the staffing attrition rate has been lower than expected. However, UPS announced a voluntary separation program for full-time U.S. drivers that should alleviate the problem. The company's costs could be reduced quite a bit as longtime drivers retire. Around 85% of UPS drivers have been with the company between 25 and 40 years and are at the top end of the pay scale. 4. UPS' long-term growth prospects remain strong. Income investors can also take comfort that UPS' long-term growth prospects remain strong. Complex healthcare logistics represents an addressable market of $82 billion and is a top priority for the company. In the Q2 earnings call, Tomé reiterated UPS' goal of becoming the world's No. 1 complex healthcare logistics provider. Acquisitions will play a key role in UPS' healthcare growth strategy. The company expects to close before year-end on its $1.6 billion acquisition of Andlauer Healthcare Group. Andlauer is a leading supply chain management company based in Canada that provides services to the healthcare sector. While small-to-medium-sized businesses (SMBs) are being hit hard by tariffs, this market is another growth driver for UPS. The company is already making progress, with SMBs contributing 32% of total U.S. volume in Q2. UPS' SMB penetration also increased by 230 basis points in the quarter. Should you buy stock in United Parcel Service right now? Before you buy stock in United Parcel Service, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and United Parcel Service wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,629!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,098,838!* Now, it's worth noting Stock Advisor's total average return is 1,049% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Keith Speights has positions in Amazon and United Parcel Service. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool has a disclosure policy. Should You Buy UPS Stock While It's Below $90? was originally published by The Motley Fool
Yahoo
01-08-2025
- Business
- Yahoo
Jim Cramer Calls United Parcel Service Stock's Plunge 'Frightening'
United Parcel Service, Inc. (NYSE:UPS) is one of the stocks Jim Cramer recently talked about. During the episode, Cramer called the company's recent quarter 'dismal.' He commented: 'Consider the following from Carol Tomé, CEO of United Parcel Service, after reporting a dismal quarter: 'Despite uncertainties around trade policies in the second quarter, the overall economy remained resilient.' Hold just a second, here we go, 'But our sector, specifically the US small package segment, was unfavorably impacted by US consumer sentiment that was at historic lows.' Wow, very bad. Historic. A win for the president in this tiff with the Fed. It gets worse. 'On the commercial side of the economy, manufacturing activity in the United States remains soft.' Leonard Zhukovsky / United Parcel Service (NYSE:UPS) provides package delivery and logistics solutions, including express and time-definite shipping, freight forwarding, and customs brokerage. The company also offers specialized services for e-commerce, healthcare, and international trade. While we acknowledge the potential of UPS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
01-08-2025
- Business
- Yahoo
Jim Cramer Calls United Parcel Service Stock's Plunge 'Frightening'
United Parcel Service, Inc. (NYSE:UPS) is one of the stocks Jim Cramer recently talked about. During the episode, Cramer called the company's recent quarter 'dismal.' He commented: 'Consider the following from Carol Tomé, CEO of United Parcel Service, after reporting a dismal quarter: 'Despite uncertainties around trade policies in the second quarter, the overall economy remained resilient.' Hold just a second, here we go, 'But our sector, specifically the US small package segment, was unfavorably impacted by US consumer sentiment that was at historic lows.' Wow, very bad. Historic. A win for the president in this tiff with the Fed. It gets worse. 'On the commercial side of the economy, manufacturing activity in the United States remains soft.' Leonard Zhukovsky / United Parcel Service (NYSE:UPS) provides package delivery and logistics solutions, including express and time-definite shipping, freight forwarding, and customs brokerage. The company also offers specialized services for e-commerce, healthcare, and international trade. While we acknowledge the potential of UPS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
01-08-2025
- Business
- Yahoo
Jim Cramer Calls United Parcel Service Stock's Plunge 'Frightening'
United Parcel Service, Inc. (NYSE:UPS) is one of the stocks Jim Cramer recently talked about. During the episode, Cramer called the company's recent quarter 'dismal.' He commented: 'Consider the following from Carol Tomé, CEO of United Parcel Service, after reporting a dismal quarter: 'Despite uncertainties around trade policies in the second quarter, the overall economy remained resilient.' Hold just a second, here we go, 'But our sector, specifically the US small package segment, was unfavorably impacted by US consumer sentiment that was at historic lows.' Wow, very bad. Historic. A win for the president in this tiff with the Fed. It gets worse. 'On the commercial side of the economy, manufacturing activity in the United States remains soft.' Leonard Zhukovsky / United Parcel Service (NYSE:UPS) provides package delivery and logistics solutions, including express and time-definite shipping, freight forwarding, and customs brokerage. The company also offers specialized services for e-commerce, healthcare, and international trade. While we acknowledge the potential of UPS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Globe and Mail
30-07-2025
- Business
- Globe and Mail
How Should Investors Approach UPS Stock Post Q2 Earnings Miss?
Shares of United Parcel Service UPS plunged 10.57% to close July 29's trading session at $90.84. The double-digit decline followed the transportation giant's earnings miss and year-over-year decline in the second quarter of 2025. Although revenues exceeded expectations, they declined year over year. Adding to the woes, the company refrained from providing full-year guidance for revenues or operating profit due to the ongoing macro uncertainty. Following the substantial stock price decline on July 29, the question is whether investors should remain invested in UPS stock or book profits and exit. Let's address this question by evaluating the company's latest quarterly performance and long-term prospects in detail. UPS' Q2 Earnings Snapshot UPS' second-quarter 2025 earnings per share of $1.55 missed the Zacks Consensus Estimate by a penny and declined 13.4% year over year. Revenues of $21.2 billion surpassed the Zacks Consensus Estimate of $20.8 billion but decreased 2.7% year over year. Results were hurt by sinking volumes. On the conference call, CEO Carol Tomé said U.S. consumer sentiment, which was near historic lows during the quarter, hurt the small package market. The CEO further said the ongoing tariff situation caused consumers to start trading down in certain categories. UPS expects capital expenditures for 2025 to be around $3.5 billion. Is UPS' Overall Share Performance Just as Disappointing? The answer to the above question is, unfortunately, yes. Shares of United Parcel Service have plunged 28% year to date compared with its Zacks Transportation—Air Freight and Cargo industry's 16% decline. Rival FedEx 's FDX price performance is better than that of UPS. YTD Price Comparison Longer-term, over the past year, too, UPS shares have performed worse than its industry and FedEx. While UPS has plunged in excess of 30%, its industry and FedEx have declined 21% and 22%, respectively, in a year. Factors Hurting UPS Stock Demand Slowdown: A Grave Concern: Due to the decline in shipping demand, volumes are being hurt. Lackluster volumes have been hurting United Parcel Service's results. The slowdown in online sales in the United States, apart from the softness of global manufacturing activity, has been hurting the demand scenario. Average daily volumes on a consolidated basis have declined 3.8% year over year in the first half of 2025. Economic Uncertainty & Tariff Concerns: Of late, U.S. markets have been characterized by a high degree of volatility amid uncertainty surrounding U.S. trade policy and growing anxiety about a slowing U.S. economy. 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. UPS Hikes Dividend: But is it Sustainable? 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 84% 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. Currently, UPS' elevated dividend payout is hurting its operational flexibility, with free cash flow barely covering the dividend. At 2024-end, free cash flow was $6.3 billion, not much above its dividend payments of $5.4 billion. Dividend payments are expected to be roughly $5.5 billion. Unfavorable Earnings Estimates Movement: The Zacks Consensus Estimate for 2025 adjusted earnings for UPS is currently pegged at $7.03 per share, indicating an 8.9% year-over-year decline. The consensus mark for 2025 revenues suggests a 4.1% decline from 2024 actuals. The Zacks Consensus Estimate for 2025 earnings has been revised 0.7% downward over the past 60 days. UPS' Valuation: A Saving Grace UPS is currently considered relatively undervalued, trading at a forward 12-month price to earnings (P/E) of 11.99X. This figure is lower than its industry average of 13.2X. It is also lower than that of FedEx. UPS currently has a Value Score of B. UPS' P/E F12M vs. Industry & FDX Don't Buy UPS Now: Near-Term Headwinds Are Hard to Ignore Agreed that UPS' valuation is attractive. Moreover, United Parcel Service's expansion efforts look good. In a bid to expand its network, UPS acquired Estafeta, a Mexican express delivery company. The company's cost containment efforts are also aimed at driving long-term growth. As part of this exercise, UPS is offering buyouts to delivery drivers for the first time in its 117-year history. United Parcel Service's full-time drivers are eligible for this offer. The company aims to trim its workforce by 20,000 this year, representing approximately 4% of the global workforce, and shut 73 facilities to streamline operations and lower labor costs. Apart from the tariff-induced economic uncertainties, UPS' decision to reduce business with its largest customer, Amazon AMZN, contributed to the decision to trim the workforce. Earlier in the year, UPS management reached an agreement in principle with Amazon to lower the latter's volume by more than 50% by June 2026. According to Carol Tome, Amazon was not its most profitable customer. However, near-term risks outweigh the positives. Tariff-related uncertainty, concerns related to dividend sustainability, and volume woes represent major headwinds. Declining earnings estimates do not help matters. Given these challenges, buying the stock, despite the significant price decline, seems premature now. We believe investors should steer clear of this stock, which currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here. #1 Semiconductor Stock to Buy (Not NVDA) The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow. One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report United Parcel Service, Inc. (UPS): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis Report
