Good directions are critical for United Parcel Service's (UPS -0.46%) fleet of 135,000 vehicles to deliver millions of packages to the right location every day. But the package delivery giant is going in the wrong direction with its share price. UPS stock has plunged roughly 50% over the last five years and is down more than 60% from its high set in early 2022.
Sometimes such steep declines indicate that investors should look elsewhere. However, significant pullbacks can also present great buying opportunities. Should you buy UPS stock while it's below $90?
Looking under UPS' hood
At least at first glance, the price seems to be right for buying UPS. The beaten-down stock trades at a forward price-to-earnings ratio of only 11.2. That low multiple could be viewed as a bargain by many investors.
However, others might be afraid that UPS could be a value trap. The company's revenue declined 2.7% year over year in the second quarter of 2025. Its adjusted diluted earnings per share sank 13.4%. UPS continues to face some serious challenges. There's so much macroeconomic uncertainty that the company didn't give revenue or operating profit guidance in its Q2 update.
Much of that uncertainty centers around the Trump administration's tariffs. UPS CFO Brian Dykes revealed in the company's Q2 earnings call that U.S. trade policies led to a decline of roughly 35% in shipments between China and the U.S. in May and June. That's especially problematic because this is UPS' most profitable shipping lane.
The U.S. small package market is also under pressure. UPS CEO Carol Tomé noted in the Q2 update that consumer sentiment was "near historic lows." She also referenced weak U.S. manufacturing activity as a headwind.
A better story than meets the eye?
Despite the question marks hanging over UPS, the stock could offer a better story than meets the eye. For one thing, I think a controversial move by management could pay off over the long run.
Last year, UPS announced plans to cut its Amazon (AMZN 0.56%) shipment volumes by more than 50% by the end of 2026. This decision seemed crazy to some observers, considering that Amazon was (and still is) UPS' biggest customer.
However, the underlying logic behind the move makes sense. Many of the shipments UPS delivered for Amazon had low margins. Eliminating this volume will allow the package delivery giant to reduce its cost structure significantly and actually boost profit margins in the process. Because of the Amazon glide-down and other efficiency initiatives, UPS expects to cut expenses by $3.5 billion in full-year 2025.
Meanwhile, the company is targeting higher-margin business. In particular, UPS is focusing on complex healthcare logistics, which represents a total addressable market of around $82 billion. The company hopes to close on its acquisition of Andlauer Healthcare Group by the end of 2025. Andlauer is a Canadian provider of logistics and specialized cold chain transportation solutions for the North American healthcare sector.
Image source: Getty Images.
Is UPS stock a buy while it's below $90?
I don't think growth investors will find UPS stock appealing at all. However, that would have been the case even when the company didn't face its current headwinds.
On the other hand, UPS could be a pretty good pick for value investors. The stock is trading at a low earnings multiple. I do expect UPS' bottom line to improve in the future (although the macroeconomic uncertainty could linger for a while).
If you're an income investor, UPS offers a juicy forward dividend yield of 7.8%. Could the board of directors decide to cut the dividend? Maybe, but that doesn't seem in the cards for now. Tomé addressed this issue head-on in the Q2 earnings call, stating, "We know how important the dividend is to our investors, and you have our commitment to a stable and growing dividend."
So is UPS stock a buy while it's below $90? The answer depends on your investing style.
