From Yahoo Finance: 2025-03-22 07:05:00

Investors are urged to consider buying UPS stock before the end of the first quarter. UPS’s earnings results on April 29 could impact the investment thesis. Package delivery is cyclical and could face near-term weakness. Other companies like Delta Air Lines, United Airlines, 3M, and Teradyne are experiencing revenue drops and order push-outs, potentially due to tariff actions.

UPS’s short cycle business model makes it vulnerable to changes in demand and sales. The company’s full-year guidance for 2025 includes revenue of $89 billion and an adjusted operating margin of about 10.8%. However, its dividend and share buyback plans may not be fully covered by its intended free cash flow. Management may need to address its capital return aims if full-year guidance is lowered.

UPS is reducing its level of Amazon deliveries by 50% by the second half of 2026, which could be disrupted by any weakness in the small package delivery market. Despite potential short-term challenges, long-term growth prospects remain strong. UPS plans to improve profit margins by focusing on higher-growth deliveries and investing in technology.

Investing in UPS for its long-term growth prospects is advised, but not solely for its dividends. Management may need to adjust its dividend and buyback aims if economic pressure persists. The Motley Fool Stock Advisor team identified 10 best stocks for investors to buy now, excluding UPS. Previous recommendations like Nvidia have shown significant returns. Join Stock Advisor for the latest top 10 list.

John Mackey, former CEO of Whole Foods Market, is on The Motley Fool’s board of directors. Lee Samaha, the author, has no position in the mentioned stocks. The Motley Fool has positions in and recommends 3M and Amazon, and recommends Delta Air Lines, Teradyne, and United Parcel Service.



Read more at Yahoo Finance: The 1 Thing You Need to Know Before Buying UPS Stock