UPS (UPS 0.65%), one of the world's top shipping couriers, hasn't generated millionaire-making gains since its public debut on Nov. 10, 1999, at $50 per share. It trades at about $85 today, so a $10,000 investment in its IPO would have grown to roughly $17,000. The same investment in an S&P 500 index fund would be worth more than $48,000.
UPS underperformed the market as competition, macro challenges, and labor issues throttled its growth and squeezed its margins. But could it stabilize its business and generate millionaire-making gains over the next few years?
Image source: UPS.
Why did UPS disappoint its investors?
UPS wasn't always such a disappointing investment. From 1999 to 2022, its annual revenue nearly quadrupled from $27.05 billion to $100.34 billion. On Feb. 2, 2022, its stock had also nearly quadrupled from its IPO price to an all-time high of $196.24.
NYSE: UPS
Key Data Points
But in 2023, its average daily package volume declined, its adjusted operating margin shrank, its revenue fell, and its diluted earnings per share (EPS) plummeted. Its growth cooled off as it lapped the pandemic-driven acceleration in online shopping, inflation curbed consumer spending, and a potential strike from the Teamsters drove some of its customers to shift their orders to rival couriers like FedEx (FDX 1.20%). It tried to offset that pressure with price hikes, but its higher labor and fuel costs erased those benefits.
|
Metric |
2020 |
2021 |
2022 |
2023 |
2024 |
|---|---|---|---|---|---|
|
Average Daily Package Volume |
24.68M |
25.25M |
24.29M |
22.29M |
22.42M |
|
Average Revenue Per Piece |
$10.94 |
$12.32 |
$13.38 |
$13.62 |
$13.60 |
|
Total Revenue |
$84.63B |
$97.29B |
$100.34B |
$90.96B |
$91.07B |
|
Adjusted Operating Margin |
10.3% |
13.5% |
13.8% |
10.9% |
9.8% |
|
Diluted EPS |
$8.23 |
$14.68 |
$13.20 |
$7.80 |
$6.75 |
Data source: UPS.
In 2024, UPS's daily package volume and revenue rose again as inflation cooled off, the Fed cut its interest rates, and it signed a new labor contract with the Teamsters to avoid a strike. But its higher labor and pension costs, its divestment of Coyote Logistics, regulatory fines, impairment charges, and heavier investments in its digital ecosystem all squeezed its operating margins.
In the first half of 2025, UPS's average daily package volume fell 4% year over year to 20.26 million, and its average revenue per piece dipped 4% to $14.28. That decline was largely caused by a decision to accept fewer shipments from its top customer, Amazon (AMZN +3.47%), since the e-commerce giant's high-volume deliveries generated much lower margins than its other orders. It also intentionally reduced its mix of lower-value shipments (like its Ground Saver economy service).
Those efforts, along with its layoffs and other cost-cutting initiatives, boosted its adjusted operating margin by 50 basis points year over year to 7%. But its revenue and EPS still declined 2% and 1%, respectively. For the full year, analysts expect its revenue and EPS to dip 4% and 6%, respectively, as it continues to right-size its business.
When will UPS start growing again?
UPS expects to reduce its Amazon-related volumes by at least 50% by mid-2026 as it expands its higher-margin premium services. It's also deepening its partnerships with more retailers, entrenching itself in "reverse" (product returns) logistics networks, expanding into the biotech and healthcare markets with refrigerated delivery options, strengthening its international presence in the higher-growth Latin American and Asian markets, and using artificial intelligence (AI) to optimize its delivery routes and automate its warehouses.
Analysts expect these initiatives to boost its revenue by 1% in 2026 and 4% in 2027. They expect its EPS to rise 15% in 2026 and another 11% in 2027. We should take those estimates with a grain of salt, but they suggest UPS's business isn't headed off a cliff.
But in 2028, UPS's current deal with the Teamsters will expire. If it hasn't right-sized its U.S. workforce, automated enough of its operations, and sufficiently expanded overseas by then, it could face another crisis. Amazon's expansion of its own logistics network as a third-party service for other businesses could also threaten UPS, FedEx, and other couriers.
So, is UPS a millionaire-maker stock?
UPS's stock might seem cheap at 12 times next year's earnings, but it probably won't command a higher valuation until its turnaround strategies bear fruit. Even if it stabilizes its business, it won't become a high-growth millionaire-maker stock.
If UPS matches analysts' estimates, grows its EPS at a CAGR of 10% from 2027 to 2035, and trades at a more generous 20 times earnings by the final year, its stock could quadruple to about $347 over the next 10 years. That would represent a solid comeback, but it probably wouldn't generate life-changing gains.
