Latest news with #UnitedParcelService
Yahoo
11 hours ago
- Business
- Yahoo
Will Blue Chip UPS Deliver for Shareholders?
UPS has been mired in a multiyear slump as demand trends have weakened in its core markets. The company is also undergoing a restructuring that threatens to curtail near-term growth. For patient investors willing to bet on an economic recovery, UPS is a solid investment choice at these levels. 10 stocks we like better than United Parcel Service › United Parcel Service (NYSE: UPS) is one of the dominant names in shipping. The company operates a sprawling network of planes, trucks, and distribution centers, shuffling e-commerce buys to their destinations and providing supply chain transportation. In 2024, UPS delivered 5.7 billion packages. But for all its strengths UPS has failed to deliver for investors of late: The stock is down more than 50% since the beginning of 2022. Here's why UPS has underperformed, and why it can be a long-term winner from here. Shipping is a great business when demand is strong, but there is little UPS or any competitor can do to boost revenue when demand for its services is weak. During the pandemic, when consumers couldn't go to the mall, the need for UPS' services skyrocketed. Investors were ready for a drop-off as stores reopened, but in the years that have followed a combination of rising inflation and concerns about the health of the economy have caused UPS' corporate customers to cut back on restocking inventories. The introduction of tariffs has caused more confusion, slowing the velocity of supply chains and further cutting into demand. UPS is also going through internal changes. The company relied on Amazon for about 11% of its $91.1 billion in 2024 revenue, but has said that business tends to be low-margin. In early 2025, UPS announced it intends to cut Amazon shipping volumes in half by the end of next that might help long-term profitability, it has negatively impacted the company's near-term growth trajectory. In its most recent quarter, UPS reported anemic 1.4% year-over-year revenue growth on a 3% decline in average daily package volume. The company guided for little to no growth in 2025. UPS is not sitting still waiting for the economy to rebound. The company is on track to take out about $3.5 billion in annual costs by year-end, including consolidating its distribution network and cutting about 20,000 jobs. Most of those gains will show up in the second half of the year. The company hopes to offset the lost Amazon business with higher-margin specialty deliveries, including healthcare and other temperature-sensitive products that need customized trucks and delivery centers. In April, UPS said it would spend $1.6 billion to acquire Andlauer Healthcare Group to expand its Canadian healthcare delivery footprint. Cyclical stocks like UPS can be frustrating for investors because there is little you can do other than ride out the cycle. In this case, the patience is warranted. UPS has been around for more than 100 years, meaning it has a track record of weathering shipping downturns and coming out stronger. Though the restructuring will take time and come at the expense of near-term growth, UPS' transition away from Amazon and toward higher-margin transport should benefit the company over time. Fortunately, investors can get paid to be patient. UPS has either maintained or increased its dividend in every year since going public in 1999, and at current prices it currently offers a yield of more than 6%. UPS is well positioned to capitalize when the economy recovers. Buying the stock today is a bet that the U.S. economy will rebound and improve over time. When it does, look for UPS to accelerate. 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 $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor's total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy. Will Blue Chip UPS Deliver for Shareholders? was originally published by The Motley Fool
Globe and Mail
2 days ago
- Business
- Globe and Mail
Wondering If UPS' 6.7%-Yielding Dividend Is Sustainable? Here's What You Need to Know.
I've read several articles recently suggesting that United Parcel Service (NYSE: UPS) should cut its dividend. The reasoning is that the world's largest package delivery company could create more value for shareholders if it did. While the idea of a dividend cut might be appealing to some, I suspect many income investors won't like it one bit. If you're in that group, you might be wondering if UPS' 6.7%-yielding dividend is sustainable. Here's what you need to know. Reasons for concern If UPS already had ample financial flexibility to fund its dividend and invest in growth, you probably wouldn't hear anyone talk about a potential dividend cut. The reality, though, is that there are some reasons for concern. Let's start with the dividend payout ratio. The closer this ratio is to 100%, the more precarious a company's dividend is. UPS' dividend payout ratio is a little over 95%. However, sometimes dividend payout ratios can be misleading. Why? They're based on earnings, which don't always give the best picture of a company's ability to fund its dividend program. Earnings can be weighed down by non-cash charges such as amortization and depreciation. A better metric to look at is free cash flow. In the first quarter of 2025, UPS generated free cash flow of nearly $1.5 billion. It paid $1.35 billion in dividends during the quarter. The company's payout ratio based on free cash flow is 90%. That gives UPS a little more breathing room to pay its dividend, but it's still not great. I also noticed that UPS Carol Tomé didn't talk about the dividend in the Q1 earnings call. But in the 2024 Q4 call, she said that the company had "plenty of liquidity to pay the dividend." It could be reading something between the lines that isn't there, but the absence of any discussion about management's commitment to the dividend could trigger a not-so-warm-and-fuzzy feeling for some income investors. Encouraging news Want some encouraging news for income investors? I have some for you. UPS' decision to slash its Amazon shipping volume in half by mid-2026 will help in several ways. The company plans to reduce total operational hours by roughly 25 million hours. It's cutting around 20,000 positions this year. UPS is closing 73 buildings by the end of June, with a total of 164 closures in the first phase of its network reconfiguration. Granted, reducing shipments for Amazon will also result in lower revenue. However, the reason behind the move was that this business isn't very profitable. UPS expects its operating margin and profitability to increase as a result of the Amazon glide-down. In addition, the package delivery giant has embarked on a major efficiency improvement project. UPS is using robots to automate label application, sorting, unloading and loading trailers, and more. By the end of 2025, the company expects to have 400 facilities partially or fully automated. With both the Amazon reductions and the efficiency improvements, UPS thinks it's on track to cut costs by $3.5 billion in 2025. This should boost free cash flow to some extent. The Trump administration's tariffs might not hurt UPS as much as anticipated, either. The U.S. International Court of Trade and the U.S. District Court for the District of Columbia ruled last week that the president can't unilaterally impose some tariffs based on the International Economic Emergency Powers Act (IEEPA). Although the tariffs remain in place while the administration appeals the decisions, these court rulings could be upheld. Is UPS' dividend sustainable? So, is UPS' juicy dividend sustainable? I think so. That doesn't mean the company's board of directors won't ultimately decide to cut the dividend. However, at least for now, they don't necessarily have to make that call. And if the Amazon glide-down and efficient improvement initiatives pay off as much as expected, maybe UPS won't have to seriously consider a dividend cut for a long time to come, if ever. Should you invest $1,000 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 10 best stocks 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 $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor 's total average return is979% — a market-crushing outperformance compared to171%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 May 19, 2025
Globe and Mail
4 days ago
- Business
- Globe and Mail
The Smartest High-Yield Stocks to Buy With $100 Right Now
You can buy some smart high-yield investments with as little as $100 if you take your time and act selectively. Right now, United Parcel Service (NYSE: UPS), Brookfield Renewable Partners (NYSE: BEP), and Enterprise Products Partners (NYSE: EPD) all have 6% yields or higher, and share prices that are below $100. Here's a look at why each one might be a good fit for your portfolio right now. 1. United Parcel Service is a turnaround story United Parcel Service (or UPS) is one of the largest package delivery services in the world. During the coronavirus pandemic, investors bid up its shares because they extrapolated demand from people staying at home too far into the future. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » When the world opened back up, UPS fell short of Wall Street's lofty expectations. At that point, the company started to revamp its business, focusing on cost-cutting and increasing margins. When it finally looked like UPS had hit an inflection point, the company announced it was voluntarily reducing the business it was doing with Amazon, its largest customer. And shortly thereafter, the tariff upheaval started. The stock remains in Wall Street's doghouse even though it is making progress on its turnaround. In fact, the move away from Amazon is really a sign of strength, not weakness. UPS is basically trying to move away from a high-volume, low-margin customer. The 6.7% dividend yield is a sign that investors are worried about the future. But if you don't mind owning a turnaround stock, UPS looks like it has its business trending in the right direction again, even if the rebound is still a few years away. The lofty yield is good compensation for waiting. 2. Brookfield Renewable Partners has a growth runway Brookfield Renewable Partners owns a portfolio of renewable energy assets, including in the hydroelectric, solar, wind, battery, and nuclear categories. Its portfolio is spread across the globe, with operations in North America, South America, Europe, and Asia. It is as close to a one-stop shop in the renewable power sector as you can find on Wall Street. And it has a lofty 6.5% distribution yield. Part of the reason Brookfield's yield is so high is that investors have lost interest in clean energy stocks. That's an opportunity for those who think long term. In the U.S. market, wind, solar, and storage generation are expected to increase by 300% between 2020 and 2050, according to the National Electrical Manufacturers Association. That's all part of a massive increase in the demand for electricity that is taking place, with demand growth over the next 20 years expected to be six times larger than over the last 20 years. This is a global phenomenon, and Brookfield Renewable Partners is well-positioned to benefit all along the way. Meanwhile, you can collect a huge yield while the slow and steady shift from dirtier carbon energy sources toward cleaner alternatives plays out. 3. Enterprise Products Partners is an income tortoise Two things beyond the lofty 6.8% yield make this master limited partnership (MLP) stand out. The first is the more important one because it is the business behind the yield. Enterprise Products Partners owns midstream energy assets, like pipelines, that help to move oil and natural gas around the world. It charges fees for the use of these assets so it generates reliable cash flows through the entire energy business cycle. Add in an investment-grade balance sheet and distribution coverage by a 1.7 multiple in 2024, and this is a rock-solid income stock. A lot would have to go wrong for a distribution cut to be on the table. In fact, given the $7.6 billion capital investment plan in the works, it is far more likely that investors will see more distribution increases in the future. And that brings up the second reason to like Enterprise: It has increased its distribution annually for 26 consecutive years and counting. This midstream business is boring and reliable, and that's exactly why you'll likely find it to be a smart high-yield investment to add to your portfolio right now. Three high-yield options for your portfolio There is more than one way to add a high yield to your dividend portfolio. UPS is a turnaround story. Brookfield Renewable Partners is an option with a strong growth story behind it. And Enterprise is a boring high-yield business that even the most conservative of income investors could easily love. Should you invest $1,000 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 10 best stocks 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 $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $853,108!* Now, it's worth noting Stock Advisor 's total average return is978% — a market-crushing outperformance compared to171%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 May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Brookfield Renewable Partners, Enterprise Products Partners, and United Parcel Service. The Motley Fool has a disclosure policy.
Yahoo
6 days ago
- Business
- Yahoo
United Parcel Service (UPS) Dips More Than Broader Market: What You Should Know
United Parcel Service (UPS) closed the most recent trading day at $96.74, moving -0.83% from the previous trading session. The stock's performance was behind the S&P 500's daily loss of 0.56%. At the same time, the Dow lost 0.58%, and the tech-heavy Nasdaq lost 0.51%. Prior to today's trading, shares of the package delivery service had gained 0.85% over the past month. This has lagged the Transportation sector's gain of 9.07% and the S&P 500's gain of 7.37% in that time. Investors will be eagerly watching for the performance of United Parcel Service in its upcoming earnings disclosure. The company is expected to report EPS of $1.57, down 12.29% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $20.84 billion, down 4.51% from the prior-year quarter. For the annual period, the Zacks Consensus Estimates anticipate earnings of $7.08 per share and a revenue of $87.37 billion, signifying shifts of -8.29% and -4.06%, respectively, from the last year. Investors should also take note of any recent adjustments to analyst estimates for United Parcel Service. Such recent modifications usually signify the changing landscape of near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential. Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system. The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 7.75% decrease. United Parcel Service currently has a Zacks Rank of #3 (Hold). Looking at its valuation, United Parcel Service is holding a Forward P/E ratio of 13.77. For comparison, its industry has an average Forward P/E of 13.77, which means United Parcel Service is trading at no noticeable deviation to the group. Also, we should mention that UPS has a PEG ratio of 1.71. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. As of the close of trade yesterday, the Transportation - Air Freight and Cargo industry held an average PEG ratio of 1.71. The Transportation - Air Freight and Cargo industry is part of the Transportation sector. This industry currently has a Zacks Industry Rank of 187, which puts it in the bottom 25% of all 250+ industries. The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Ensure to harness to stay updated with all these stock-shifting metrics, among others, in the next trading sessions. 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 This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
26-05-2025
- Business
- Globe and Mail
UPS vs. WAB: Which Dividend-Paying Transportation Stock to Bet on Now?
United Parcel Service UPS and Westinghouse Air Brake Technologies Corporation WAB, operating as Wabtec Corporation, are two prominent names in the Zacks Transportation sector. Both companies have announced dividend hikes this year despite the prevalent economic uncertainties, reflecting their shareholder-friendly approach. Dividend-paying stocks provide a solid income stream and have fewer chances of experiencing wild price swings. Dividend stocks are safe bets for creating wealth, as the payouts generally act as a hedge against economic uncertainty, like the current scenario. In February, Wabtec's board of directors approved a dividend hike of 25%, thereby raising its quarterly cash dividend to 25 cents per share ($1.00 annualized) from 20 cents (80 cents annualized). Also, in February, UPS' board of directors approved a dividend hike, thereby raising its quarterly cash dividend to $1.64 per share ($6.56 annualized) from $1.63 ($6.52 annualized). Wabtec Dividend Yield (TTM) Wabtec dividend-yield-ttm | Wabtec Quote United Parcel Service Dividend Yield (TTM) United Parcel Service. dividend-yield-ttm | United Parcel Service. Quote Sustainability of UPS' Dividends in Question Unlike WAB No doubt UPS' most recent dividend hike reflects its 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) highlights the concerns 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 then, 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. United Parcel Service expects to generate free cash flow of around $5.7 billion in 2025. Dividend payments are expected to be roughly $5.5 billion. On the other hand, WAB's much lower dividend payout ratio implies that concerns associated with its ability to maintain dividend payouts over the long term are absent. While we have considered the dividend-paying abilities of both the transportation stocks, let's delve deeper to compare other relevant metrics to determine whether WAB or UPS is a better investment now. Price Performance of WAB and UPS WAB has navigated the recent tariff-induced stock market volatility well, registering a 5.1% year-to-date gain, while UPS stock has performed miserably in 2025 so far, declining in double digits. YTD Price Comparison UPS' lackluster price performance is mainly due to the revenue weakness as geopolitical uncertainty and high inflation continue to hurt consumer sentiment and growth expectations. The weak demand scenario has led to a decline in the volume of packages shipped. On the other hand, WAB's recent strength is driven by its focus on new technologies to improve safety and reliability, apart from its restructuring actions and cost-cutting initiatives. The improving global rail supply market in the post-COVID scenario is another positive for the company. The Association of the European Rail Industry, UNIFE, expects the global market for railway systems and services to grow at an annual average of around 3% until 2027-29. How Do Zacks Estimates Compare for WAB & UPS? The Zacks Consensus Estimate for WAB's 2025 and 2026 sales implies a year-over-year increase of 4.6% and 4.9%, respectively. The consensus mark for WAB's 2025 EPS highlights a 15.3% year-over-year drop. The 2026 EPS consensus mark indicates an 11.5% year-over-year increase. Moreover, the EPS estimates for 2025 and 2026 have been trending northward over the past 30 days. Image Source: Zacks Investment Research The Zacks Consensus Estimate for UPS' 2025 sales estimate implies a 4.1% year-over-year decrease, while the same for 2026 implies a 0.9% year-over-year increase. The consensus mark for UPS' 2025 EPS highlights an 8.3% year-over-year decrease. The same for 2026 implies a 13.8% year-over-year increase. The EPS estimates for 2025 and 2026 have been trending southward over the past 30 days, unlike WAB. WAB Appears to be More Pricey Than UPS WAB is trading at a forward sales multiple of 3.08, above its median of 2X over the last five years. WAB has a Value Score of D. Meanwhile, UPS has a Value Score of C, with its forward sales multiple at 0.92, below its 5-year median of 1.54. Conclusion WAB's expensive valuation (compared to its 5-year median) seems to suggest that investors are to pay a premium for this key player in the transportation sector. Agreed that both stocks focus on paying dividends but WAB's lower dividend payout ratio puts to rest concerns about dividend sustainability, unlike UPS. WAB's better price performance and northward earnings estimate revisions highlight the fact that its focus on new technologies to improve safety and reliability, apart from its cost-cutting actions, is working well. Given its prospects, WAB seems a better pick than UPS now. While WAB carries a Zacks Rank #2 (Buy), UPS is currently #5 Ranked (Strong Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.0% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> 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 Wabtec (WAB): Free Stock Analysis Report
