UPS Stock: Further Decline Ahead?

The stock market is a fickle beast, and united parcel service (UPS) is no exception. Despite its status as the world’s largest package delivery company, ups stock has been on a rollercoaster ride, and recent indicators suggest that the ride might not be over yet. Let’s dive into the numbers and see if UPS stock has further to fall.

First, let’s look at the revenue growth. UPS reported consolidated revenues of $25.3 billion for the fourth quarter of 2024, a 1.5% increase from the fourth quarter of 2023. While this shows some growth, it is relatively modest compared to historical data. For instance, the third quarter of 2024 saw a 5.6% increase in consolidated revenues compared to the third quarter of 2023. This slower growth rate in the fourth quarter could indicate a potential decline in revenue momentum.



Next, let’s examine the operating margin. The consolidated operating margin for the fourth quarter of 2024 was 11.6%, with a non-GAAP adjusted operating margin of 12.3%. While these figures are positive, they are lower than the non-GAAP adjusted operating margin of 12.8% reported for the third quarter of 2024. This decline in operating margin could suggest increasing operational costs or inefficiencies, which might negatively impact stock performance.



Earnings per share (EPS) is another crucial indicator. Diluted EPS for the fourth quarter of 2024 was $2.01, with a non-GAAP adjusted diluted EPS of $2.75. Although this represents an 11.3% increase from the same period in 2023, it is lower than the non-GAAP adjusted diluted EPS of $2.84 reported for the third quarter of 2024. This decrease in EPS could indicate a slowing in earnings growth, which might deter investors.

Market share is also a concern. UPS's market share in the Transport & Logistics Industry was 50.29% for the 12 months ending Q3 2024, slightly down from 50.49% for the 12 months ending Q2 2024. This slight decline in market share could suggest that UPS is losing ground to competitors, which might negatively impact its stock performance.

Finally, let’s compare UPS to its competitors. FedEx Corporation, a major competitor, reported revenues of $87,393.00 million for the 12 months ending Q3 2024, with a market share of 36.95% in the Transport & Logistics Industry. While UPS has a larger market share, FedEx's revenue growth rate of 3.5% for the same period is higher than UPS's 1.5% growth rate. This could indicate that UPS is not keeping pace with its competitors in terms of revenue growth.

In conclusion, the modest revenue growth, declining operating margin, slowing EPS growth, slight decline in market share, and mixed performance compared to industry benchmarks all suggest that UPS stock might continue to decline. These indicators, when compared to historical data and industry benchmarks, paint a picture of a company that is facing challenges in maintaining its growth momentum and market position. Investors should keep a close eye on UPS's performance in the coming quarters, as the company navigates these headwinds.

Ask Aime: Is UPS stock poised for a further decline?