United Parcel Service (UPS +2.20%) stock fell 4.2% through 11 a.m. ET this morning, despite beating analyst forecasts in its Q1 report this morning.
Heading into the report, analysts expected UPS to earn $1.03 per share on $21 billion in quarterly sales. In fact, UPS earned $1.07 per share, adjusted for one-time items, on sales of $21.2 billion.
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UPS Q1 earnings
Not all the news was good. U.S. and supply chain revenue both declined year over year, by 3% and 6%, respectively, with only international revenues rising (about 4%). Total revenue slipped 1%.
Earnings per share took a bigger hit. Although UPS beat pro forma estimates, earnings calculated under generally accepted accounting principles (GAAP) were a nickel under non-GAAP earnings -- $1.02 per share -- and that was down more than 27% year over year!
CEO Carol Tomé pooh-poohed the decline, however, arguing that while the results might not be pretty, "the first quarter of 2026 marked a critical transition period for UPS ... [which is now] behind us." Going forward, UPS expects to resume growing.
NYSE: UPS
Key Data Points
What's next for UPS?
It even expects to grow a bit faster than Wall Street is looking for. Turning to guidance, UPS forecasts $89.7 billion in sales this year, up 1% from 2025 sales. Management did not provide GAAP earnings guidance, but said its full-year "adjusted operating margin" should be 9.6% -- a sizable improvement from the 6.1% margin recorded in Q1.
If UPS hits those marks, it should meet or beat analyst forecasts for a $7.05-per-share GAAP profit this year. On a $104 stock, that works out to a forward P/E ratio of less than 15. For a turnaround that's growing sales again, expanding margins, and paying a 6.1% dividend yield, that sounds pretty cheap to me.
