UPS is closing facilities to adjust to lower Amazon package volume, rerouting packages to automated facilities that can process at a 28% lower cost. The shift to automation is expected to drive down per-package costs and help UPS return to sustainable growth.

As UPS downsizes its U.S. facilities and automates operations, it is cutting costs by eliminating old buildings that require extensive maintenance. The deployment of robots and automated systems in facilities is expected to increase efficiency, with 57% of packages already going through automated facilities in 2023.

Despite a decline in revenue due to reducing Amazon package volume, UPS’s long-term outlook appears positive with automation driving lower per-package costs. Analysts expect adjusted earnings per share of $7.12 in 2026, with UPS stock trading at a reasonable price-to-earnings ratio of 15.

Investors looking at United Parcel Service stock should consider the potential for growth through automation and cost reduction. While UPS wasn’t identified among the 10 best stocks by the Motley Fool’s Stock Advisor team, the company’s focus on automation and cost efficiency could lead to improved profit margins in the future.

Read more at Nasdaq: UPS’s Robot Army Just Cut Package Costs by 28%