Latest news with #UnitedParcelService
Yahoo
6 hours ago
- Business
- Yahoo
This High-Yield (7%) Dividend Stock Is Down Significantly in 2025. Should You Buy the Dip?
Package delivery and logistics leader United Parcel Service (UPS) has now joined an exclusive list of S&P 500 Index ($SPX) companies that offer a dividend yield of more than 7%. However, this was a consequence of the company's weaker-than-expected second quarter results, in which its earnings missed consensus estimates. Since then, the stock has corrected by nearly 15%, with the company's current market capitalization at approximately $73 billion. UPS stock now offers a dividend yield of 7.56%, with a payout ratio nearing 90%, which will almost certainly put a halt to its impressive record of 15 consecutive years of dividend growth. More News from Barchart High Yields Without High Risk: 3 Dividend Kings You'll Want to Hold Forever Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. So, is UPS stock, which is down 31% on a YTD basis, an attractive investment option considering its newfound high-yield status? Let's have a closer look. Financials Weakening at UPS In Q2 2025, UPS reported revenues of $21.2 billion, a drop of 2.7% from the previous year. While the core domestic segment reported a marginal YOY decline to $14.1 billion, the international segment witnessed a yearly rise of 2.6% to $4.5 billion. Meanwhile, earnings saw a 13.4% decline in the same period to come in at $1.55 per share, slightly lower than the consensus estimate for $1.56. Notably, this was just the second quarter out of nine that saw an EPS miss. For the six months ended June 30, 2025, net cash from operating activities dropped to $2.7 billion from $5.3 billion in the year-ago period, which is a matter of concern. However, the company's liquidity position remained solid as it closed the quarter with a cash balance of $6.2 billion, which was much higher than its short-term debt levels of $1.6 billion. Finally, the share price decline has brought the stock to undervaluation levels. UPS is now trading at a forward price-earnings ratio of 13.1x, below the sector median of 20.4x and its own five-year average of 17x. UPS Continues to Look for Stable Growth Amid tariff issues and an uncertain economic environment, CEO Carol B. Tome sounded guarded about the company's prospects in the latest earnings call. Tome emphasized that 'our second quarter financial results reflect the impact of a complex macro environment.' However, she sounded more confident about the company's international segment, highlighting that 'volume in our China to the rest of the world trade lanes increased by 22.4%, and we nearly doubled our capacity between India and Europe' while confirming plans to acquire Estafeta and Andlauer Healthcare Group ( stating, 'We expect this acquisition to close before the end of the year.' Estafeta is a Mexican logistics and parcel delivery company with a presence in 95% of the country through 33 warehouses, while Andlauer Healthcare is a Canadian healthcare logistics and supply-chain provider, operating 9 distribution centers and 22 branches across Canada. It also offers specialized transportation services throughout the contiguous 48 U.S. states. Specifically, through the latter acquisition, UPS is expanding into the more specialized and less cyclical healthcare logistics segment, which is difficult for many competitors to replicate because of its time-sensitive nature and stringent regulatory requirements. UPS is also accelerating its use of automation. Inside its facilities, artificial intelligence now guides mechanical arms that help sort parcels and unload vehicles. The company expects these systems to lower staffing costs while also reducing workplace injuries. According to industry sources, discussions are underway with Figure AI, a prominent developer of humanoid robots. If these talks result in deployment, such robots could one day be used for certain delivery tasks, creating the potential for considerable cost savings. UPS has also embraced drones for inventory checks in its warehouses. Also, through its UPS Flight Forward division, it holds FAA authorization to operate a drone delivery network in the United States. That network has been used mainly for urgent medical shipments, but the company is now testing drones that can take off from moving trucks, deliver packages, and return to the vehicle without requiring it to stop. Overall, UPS is combining AI-driven sorting processes, robotic systems for labeling and materials handling, and forecasting tools to optimize labor scheduling. This is a significant structural redesign of UPS' physical network aimed at speeding up operations and lowering costs. With services that reach over 200 countries and the largest combined air-and-ground delivery network in the world, UPS remains positioned as the leading global provider of integrated logistics. Viewed in this context, the company's softer financial performance in the second quarter of 2025 is likely to be seen as a short-term setback rather than a sign of lasting weakness. However, a material concern for UPS can be its changing dynamic with Amazon (AMZN). UPS announced earlier this year that it plans to reduce Amazon's shipment share by more than half by the end of 2026. While Amazon is currently its largest client, executives have said that this business generates margins that are below the company's domestic average. In 2024, revenue tied to Amazon accounted for a substantial 11.8% of total sales. Moreover, as Amazon expands its logistics network and positions itself to deliver for third parties, UPS could face additional pressure on both package volumes and profit margins going forward. Analyst Opinions on UPS Stock Overall, analysts have deemed the stock a 'Moderate Buy' with a mean target price of $107.21. This indicates upside potential of about 24% from current levels. Out of 29 analysts covering the stock, 15 have a 'Strong Buy' rating, one has a 'Moderate Buy' rating, 11 have a 'Hold' rating, and two have a 'Strong Sell' rating. On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on 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
Yahoo
a day ago
- Business
- Yahoo
Could Buying UPS Stock Today Set You Up for Life?
Key Points UPS' stock has tumbled over the past several years. It's struggled with labor issues, competition, and macro challenges. Its low valuation and high yield should limit its downside potential. 10 stocks we like better than United Parcel Service › UPS (NYSE: UPS), one of the world's largest shipping couriers, might seem like a reliable long-term investment. But over the past five years, its stock declined 40%. Even after including its reinvested dividends, it delivered a negative total return of 28%. UPS struggled as its macro headwinds, labor disputes, and competitive challenges throttled its growth. But at $87, it trades at just 12 times next year's earnings and pays a hefty forward dividend yield of 7.6%. Should investors buy this unloved stock, collect its big dividends, and expect it to generate life-changing gains over the next few decades? What happened to UPS over the past few years? UPS' average daily package volume, average revenue per piece, and total revenue all increased in 2020 and 2021 as the pandemic drove more people to shop online. That rising demand enabled it to charge higher fees, which boosted its adjusted operating margins and earnings per share (EPS). But in 2022 and 2023, its daily package volumes dipped as it lapped its pandemic-era growth spurt, inflation curbed consumer spending, and threat of a strike from the Teamsters drove some of its customers to shift their orders to other couriers like FedEx (NYSE: FDX). UPS tried to offset that pressure with price hikes, but its higher labor and fuel costs offset those gains, crushed its adjusted operating margins, and caused its EPS to plummet. Metric 2019 2020 2021 2022 2023 2024 Average Daily Package Volume 21.88M 24.68M 25.25M 24.29M 22.29M 22.42M Average Revenue Per Piece $10.87 $10.94 $12.32 $13.38 $13.62 $13.60 Total Revenue $74.09B $84.63B $97.29B $100.34B $90.96B $91.07B Adjusted Operating Margin 11% 10.3% 13.5% 13.8% 10.9% 9.8% Diluted EPS $7.53 $8.23 $14.68 $13.20 $7.80 $6.75 Data source: UPS. In 2024, its daily package volume and revenue increased again as the macro environment stabilized and it negotiated a new labor contract with the Teamsters. But those higher labor and pension costs, its divestment of Coyote Logistics, regulatory fines in the U.S. and Italy, impairment charges, and investments in its digital ecosystem reduced its operating margins and EPS again. UPS isn't out of the woods yet In the first six months of 2025, UPS' average daily package volume declined 4% year over year to 20.26 million. Its average revenue per piece grew 4% to $14.28 as its adjusted operating margin expanded 50 basis points to 7%, but its revenue dipped 2% and its EPS fell 1%. That decline was mainly caused by three strategic shifts. First, it accepted fewer shipments from Amazon (NASDAQ: AMZN), its largest customer, because those deliveries generated much lower margins than its deliveries for smaller customers. UPS aims to reduce its Amazon-related volumes by at least 50% by mid-2026. Second, it raised its prices to reduce its mix of lower-value shipments (like its Ground Saver economy service). Lastly, it closed dozens of distribution centers and laid off thousands of workers to resize its business and offset the pressure from its new labor contracts. All these moves indicate that UPS will sacrifice its near-term revenue growth to strengthen its long-term margins, but it will struggle to grow its EPS until its top-line growth stabilizes again. The Trump administration's unpredictable tariffs on cross-border purchases -- and their effect on e-commerce orders from China to the U.S. -- could further complicate its recovery. Don't count on UPS to deliver life-changing gains UPS hasn't provided any revenue or earnings guidance for the full year. However, analysts expect its revenue and EPS to decline 4% and 7%, respectively, as it slogs through those aforementioned challenges. They expect UPS' revenue and earnings to finally grow modestly again in 2026 and 2027 after it slims down its business, but investors should take those estimates with a grain of salt. It might be a good value play for income investors at these levels, since its low valuation and high yield should limit its downside potential. But investors looking for a stock that can set them up for life should probably avoid UPS and look for higher-growth plays with more upside potential. 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,119,863!* Now, it's worth noting Stock Advisor's total average return is 1,060% — 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 August 4, 2025 Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon, FedEx, and United Parcel Service. The Motley Fool has a disclosure policy. Could Buying UPS Stock Today Set You Up for Life? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
5 days ago
- Automotive
- Yahoo
Lucid (LCID) Stock Trades Down, Here Is Why
What Happened? Shares of luxury electric car manufacturer Lucid (NASDAQ:LCID) fell 9.7% in the afternoon session after the company reported second-quarter results that missed analyst expectations and lowered its full-year production forecast. The company posted revenue of $259.4 million, which fell roughly in line with analyst estimates. Lucid also cut its 2025 production outlook to a range of 18,000 to 20,000 vehicles, down from a previous target of 20,000. The report revealed a negative gross margin, a figure that included a $54 million hit from tariffs and signaled significant cost pressures. The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lucid? Access our full analysis report here, it's free. What Is The Market Telling Us Lucid's shares are extremely volatile and have had 55 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move we wrote about was 8 days ago when the stock dropped 7.7% on the news that bellwether United Parcel Service (UPS) reported weak earnings and withheld its full-year guidance, citing 'macro-economic uncertainty' and low consumer sentiment. The logistics giant reported a decline in revenue and missed profit estimates, sending a chill through the entire logistics chain. UPS pointed to a challenging economic environment and near-historic lows in U.S. consumer confidence as key factors for its performance. By withholding its full-year forecast, the company signaled significant uncertainty ahead, confirming fears of a broader economic slowdown that could impact demand for shipping and freight services. This news weighed on other ground and rail transportation stocks, as investors worried that the headwinds affecting UPS could be a sign of wider issues across the industry. Lucid is down 27.2% since the beginning of the year, and at $2.21 per share, it is trading 48.2% below its 52-week high of $4.26 from August 2024. Investors who bought $1,000 worth of Lucid's shares at the IPO in September 2020 would now be looking at an investment worth $222.95. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story. 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
05-08-2025
- Business
- Globe and Mail
The Smartest Dividend Stocks to Buy With $10,000 Right Now
Key Points Several strategic decisions United Parcel Service has made of late are starting to come together just as the world shakes off the last of the post-pandemic delivery and logistics lull. Shares of drugmaker Pfizer have been upended by price-control worries and a wind-down of its booming COVID-19 business. But there's reason to look for better days on the horizon. Defense contractor Lockheed Martin looks and seems vulnerable. The market's not seeing its future in quite the right light, though. 10 stocks we like better than Lockheed Martin › Are you looking to put a sizable chunk of cash to work generating investment income? Whether you intend to live on this income or reinvest it to bolster your portfolio's overall growth, there are several great dividend-paying options out there right now. Here's a closer look at three of your best bets at this time, not despite each stock's recent turbulence and mostly bearish drama but because of it. United Parcel Service You probably already know that United Parcel Service 's (NYSE: UPS) revenue dwindled after soaring during and because of the COVID-19 pandemic, taking a similar toll on the bottom line. Indeed, the delivery giant's business has been stagnant -- at best -- since 2022. Its second-quarter sales and income both fell on the order of 1% year over year, extending its anemic results in the meantime. The amount of business and pricing power that was in place just four years ago simply isn't there anymore. UPS stock's 63% pullback from its 2022 peak to yet another new multiyear low reached earlier this month, however, is overdone at the exact wrong time to price in such pessimism. Not every investor will immediately agree with this assessment. The threat of a lingering tariff war continues to threaten United Parcel Service's business following its post-pandemic slowdown. The company isn't exactly helping its stock either, opting not to offer any guidance with its recently released Q2 report, after which CEO Carol Tomé lamented during the quarterly earnings call that "for our sector, this remains a very unsettling time." There's an argument to be made, however, that all the worst-case scenario is now priced in at a time when things are on the verge of turning around. The decision to make fewer but more profitable deliveries has already been enacted, for instance. And the company has already cut $3.5 billion worth of annual overhead, with total yearly savings of $6 billion being targeted further down the road. It's just going to take a little more time to make and see the adjustment to such changes. The backdrop is still quite bullish in the meantime, though. An outlook from Mordor Intelligence suggests the global parcel delivery market is set to grow at an average annual pace of just over 5% through 2030, jibing with expectations from Global Market Insights. That's better growth than we've seen at any point since the wind-down of the coronavirus contagion. Newcomers will not only be plugging into UPS while its forward-looking yield stands at 7.4%, but while the stock's priced dirt cheap -- at only 13 times this year's analyst-expected per-share earnings of $6.64. It's not going to get much cheaper than that. Pfizer It's a tough time to be excited about owning any pharmaceutical stocks, but especially Pfizer (NYSE: PFE). Not only is the federal government looking to force drugmakers to offer better prices to its Medicare program, but Pfizer still hasn't restored the revenue it lost once the need for its COVID-19 vaccine and treatment evaporated in 2023. That's the chief reason shares have been more than halved since late 2021. Well, that and the fact that the company is technically dishing out more in dividends than it's earning while it's facing a handful of patent expirations in the foreseeable future. Just don't lose perspective here. On any of it. Take its underfunded dividend as an example. It's not actually underfunded. Last year's reported per-share earnings of $1.41 were less than the full-year dividend payout of $1.68 per share, but that figure reflected a one-time accounting charge. Stripping this expense out of the equation reinflates earnings to a more normalized figure of $3.11 per share, easily covering its dividend. Pfizer also has replacements in the works for all its COVID drugs that are less needed, as well as its drugs with patents set to expire in the foreseeable future. Vepdegestrant (for ER+/HER2- metastatic breast cancer) and sigvotatug vedotin (for metastatic non-small cell lung cancer) are both in late-stage trials now, for instance, as part of a developmental pipeline that consists of around 50 oncology drugs. Although none of these drugs are going to be approved and marketed in the immediate future, the company is aiming to launch at least eight new cancer drugs by 2030. The market could begin rewarding their eventual success much sooner, though. The company's also looking to enter the multibillion-dollar weight-loss market with its own GLP-1 receptor agonist, which is based on the same basic science as well-known semaglutide. And as for the threat of lower drug prices for Medicare-covered patients, don't read too much into it. This threat remains in permanent circulation and rarely causes as much trouble as feared. As BMO Capital Markets analyst Evan David Seigerman noted back in May, when President Donald Trump first ramped up his rhetoric on the matter, his plan "could be more rhetoric than actual implementable policy." In other words, it's more bark than bite. Don't be surprised to see Pfizer shares start climbing again once more investors start connecting all these dots, particularly given how their weakness has inflated the stock's forward-looking dividend yield to 7.2%. Lockheed Martin Finally, add defense contractor Lockheed Martin (NYSE: LMT) to your list of dividend stocks to buy with bigger amounts of capital while its forward-looking dividend yield is a respectable 3.1%. It's yet another victim of federal budget real and feared. In June, for instance, the U.S. Department of Defense halved its previous order of F-35 fighter jets (which account for more than one-fourth of Lockheed's annual revenue) for the government's fiscal year beginning in October. That followed March's news that the DoD chose Boeing rather than Lockheed to manufacture the next-generation F-47 fighter plane... a contract that could have been worth hundreds of billions of dollars over the course of many, many years. Meanwhile, support for Ukraine in its conflict against Russia appears to be waning, potentially crimping deliveries of new weaponry to the region. All told, Lockheed Martin shares are down more than 30% from October's peak and still testing new 52-week lows on these worries. . Once again, though, don't lose perspective. The U.S. military may not need as many F-35 fighter planes as it thought it would in the year ahead, nor does it want Lockheed-Martin to manufacture its next generation of fighter jets. It still needs much of Lockheed's weapons and military hardware, though, like its newly unveiled artificial intelligence-powered synthetic aperture radar (SAR) that facilitates airborne maritime surveillance or its new magnetic anomaly detection technology (capable of finding submerged submarines) for its Sikorsky MH-60R "Seahawk" maritime helicopters. And just last month, the U.S. Missile Defense Agency added another $2 billion to an $8.3 billion contract with Lockheed to provide it with terminal high-altitude area defense (THAAD) interceptor missiles. Sure, investors would love to see strong and sustained demand for the F-35, which generates maintenance revenue long after the purchase of the aircraft is completed. Shareholders would have also been thrilled to see the company win the F-47 contract to the same reason. Lockheed Martin still has a range of ways to monetize its military hardware know-how for the long haul, though. Let's also not forget that one of the few things the United States' two major political parties agree on is the need to fully fund the nation's ability to defend itself and its interests. Even in the face of economic uncertainty, the U.S. Senate's overseeing panel recently approved a defense budget of $852 billion for the upcoming year, up just a bit from this year's figure and extending a multiyear growth trend that isn't apt to slow anytime soon. Admittedly, Lockheed stock's 3.1% yield isn't huge. It's based on a dividend; however, that's now been raised for 22 consecutive years. So close to becoming dividend royalty, it's unlikely the company's going to stop raising its annual dividend payments now. Should you invest $1,000 in Lockheed Martin right now? Before you buy stock in Lockheed Martin, 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 Lockheed Martin 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 $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,820!* Now, it's worth noting Stock Advisor's total average return is 1,019% — a market-crushing outperformance compared to 178% 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 August 4, 2025
Yahoo
03-08-2025
- Business
- Yahoo
Is UPS's 7.5%-Yielding Dividend Still Safe?
Key Points UPS reported a decline in earnings in its most recent quarter. The president has closed the de minimis loophole for all countries, which could adversely impact UPS's business. The stock has been struggling this year, and that has pushed its yield up to well over 7%. 10 stocks we like better than United Parcel Service › When a stock's yield is more than 7%, it's only natural to question whether it's sustainable. After all, if it were truly safe, it would be a bargain buy, investors would buy it up, and as the price would rise, that yield would come down. When that isn't happening, it's a sign that investors are having second thoughts about the payout and whether it really is worth the risk. Logistics giant United Parcel Service (NYSE: UPS) offers a mouthwatering payout of 7.5%, which is well above the S&P 500 average of just 1.2%. At such a high yield, you might expect it to be on the buying list of all income-seeking investors. But as of the end of July, the stock was down more than 30%. That downward pressure has been pushing the yield higher. Are investors overlooking a quality dividend stock with UPS, or could its payout really be in trouble? What UPS's Q2 earnings numbers say On July 29, UPS reported its second-quarter earnings for the period ending June 30. The numbers weren't too bad, as domestic revenue declined by just 0.8% to $14.1 billion. And internationally, revenue rose by nearly 3% to $4.5 billion. Demand hasn't taken a big hit just yet, but investors are clearly worried about what lies ahead, as tariffs and trade wars could have an adverse effect on the company's future growth. A key figure to look at is the diluted earnings per share (EPS). It came in at $1.51 for the most recent quarter, down from $1.65 a year ago. That's a problem, because UPS's dividend is $1.64 per quarter. That means, based on its current level of profitability, its earnings are not strong enough to support the dividend. And if there's a slowdown in business in the future and profits decline even further, that will only exacerbate those concerns. And UPS isn't hiding the fact that there is plenty of uncertainty -- it isn't providing investors with any guidance this year related to revenue or operating profit. Is a dividend cut inevitable for UPS? Management didn't provide guidance for revenue or profit, but it did say it expects to make dividend payments of around $5.5 billion this year, which would suggest the payout is safe. However, it did state that it was subject to board approval. In a constantly evolving macroeconomic picture, it's understandable that UPS isn't offering firm guidance with respect to its financials or even its dividend payments right now. U.S. President Donald Trump has also recently issued an executive order to suspend duty-free de minimis exemptions for all countries. Previously, the de minimis loophole allowed online retailers from other countries to ship low-cost goods into the U.S. without worrying about duties and tariffs. Now, however, that loophole is closed, and that could negatively impact UPS's international business, which was a bright spot this past quarter. Based on these developments and the fact that there's still plenty of uncertainty around tariffs, I wouldn't hold my breath that UPS will be able to recover anytime soon. The worst could be ahead for the company's financials, which may put even more pressure on a dividend that is already looking unsustainable; a dividend cut could indeed be inevitable for UPS. Should you consider investing in UPS despite all the tariff uncertainty? UPS is a leading logistics company, but with many potential headwinds to worry about these days, it's difficult to be bullish on the stock. If you're a long-term investor, you may be tempted to buy it, given that it's trading at only 13 times its trailing earnings, but you'll need to brace for the reality that it could be a bumpy ride for the foreseeable future. I'd suggest keeping an eye on the stock and putting it on a watch list, but I wouldn't buy it just yet, as a dividend cut could send it into an even deeper tailspin. While UPS's yield looks attractive, it's not a safe payout to rely on right now. There are many other safer dividend stocks to consider instead. 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 $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,820!* Now, it's worth noting Stock Advisor's total average return is 1,019% — a market-crushing outperformance compared to 178% 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 David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends United Parcel Service. The Motley Fool has a disclosure policy. Is UPS's 7.5%-Yielding Dividend Still Safe? was originally published by The Motley Fool
