United Parcel Service (UPS) is experiencing a period of revenue weakness due to tariff-related uncertainty, inflation, and geopolitical challenges. Despite this, the adjusted operating margin has increased to 10% in the third quarter of 2025. UPS has decided to reduce business with Amazon, its largest customer, to improve profitability.

UPS expects adjusted operating margin to reach 11-11.5% in the final quarter of 2025. The company anticipates U.S. Domestic segment revenues to be $16.2 billion with an adjusted operating margin of 9.5-10%. FedEx, UPS’ rival, is also cutting costs to counter weak demand and aims for an adjusted operating income of $6 billion in fiscal 2026.

UPS’ shares have declined over 6% in the past six months, trading at a 12-month forward price-to-earnings ratio of 13.16X. The Zacks Consensus Estimate for UPS’ earnings in 2025 and 2026 has remained stable. UPS currently holds a Zacks Rank #3 (Hold).

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Read more at Nasdaq: UPS Margins Show Growth Despite Revenue Woes: Scope for More Upside?