United Parcel Service (UPS -0.27%) is a package delivery service. That sounds like a simple business, but it is logistically complex and requires huge capital investments. That said, moving packages around the world is vital to the global economy. UPS is an industry leader today and is likely to remain one for the next 10 years and beyond. Which is why now, while the stock is deeply unloved, could be a good time to buy stock.
UPS is going through some changes
UPS' revenues have been falling, and its costs have been rising. That's a terrible trend for earnings, which have been pretty ugly. However, there's a good reason for what's happening on this industrial giant's income statement: UPS is in the middle of a major corporate overhaul. It is attempting to become a leaner and more profitable operation.
Image source: Getty Images.
Unfortunately, in the near term, that means spending more on technology and infrastructure while also shifting away from high-volume, low-margin customers. The big story on the customer front was UPS' pre-emptive move to reduce the number of packages it delivers for Amazon (AMZN -1.79%), a large but not particularly profitable customer. But there are signs that the company is making important progress, including the steady rise in revenue per piece in the U.S. market despite lower revenue in the U.S. business. This is, basically, the company's goal. The company has told investors that the second half of 2026 will be the inflection point.
There's still time to get on board
To be fair, UPS' stock has already started to move higher after hitting a low in 2025. But the shares are still more then 50% below their 2022 peak, so there's still likely more recovery potential here in the near term. And, if you are looking out over a decade or longer, well, the business has a lot going for it.
NYSE: UPS
Key Data Points
Given the massive infrastructure needed to even participate in the package delivery business, UPS has a strong industry position. Ongoing growth in e-commerce suggests that package delivery will become increasingly important over time. And once the current overhaul is complete, UPS will be a better-structured business to capitalize on that growth.
It isn't easy buying a turnaround stock, given that some turnarounds don't work out. However, UPS' turnaround appears to be taking hold. A decade from now, that will likely be glaringly obvious, which is why you should consider buying the stock now. Otherwise, you may look back and regret passing up the opportunity.
