UPS Under $100: Your Last Chance to Buy?
UPS shares have climbed steadily since October after the company reported stronger-than-expected earnings for the third quarter. The delivery giant also reaffirmed its cost-cutting strategy, lifting investor confidence in a potential turnaround. Yet questions remain about whether recent gains can be sustained over the long term.
The company has faced persistent challenges in recent years. A sharp decline in post-pandemic e-commerce volumes, rising labour costs, and fierce competition from Amazon have weighed on performance. Under CEO Carol B. Tomé, who took charge in March 2020, UPS has pushed ahead with efficiency measures to stabilise operations.
Analysts now project a 4.2% increase in earnings by 2026, though the recovery is expected to unfold over years rather than months. One bright spot is the company’s forward dividend yield of 6.6%, which has attracted income-focused investors. However, the payout ratio stands at 87%, sparking concerns about whether the dividend can be maintained without stronger profit growth. If UPS can deliver consistent revenue growth and improved margins, it may narrow the valuation gap with rival FedEx. The next test comes in late January, when the company releases its next earnings report. Any shortfall could trigger renewed volatility in the share price.
The recent share rally reflects optimism around UPS’s cost-cutting efforts and earnings momentum. But the path ahead depends on whether the company can overcome structural pressures while balancing its high dividend commitments. Investors will be watching closely for signs of progress in the coming quarters.
