UPS Gears Up to Report Q1 Earnings: How to Play the Stock

United Parcel Service UPS  is scheduled to report its first-quarter 2025 results on Tuesday, April 29, 2025.

The Zacks Consensus Estimate for the March-quarter earnings is pegged at $1.42 per share, implying a 0.7% decrease from the year-ago quarter’s reported number. The estimate has been revised downward by seven cents over the past 60 days.

The Zacks Consensus Estimate for revenues is pegged at $21.06 billion, indicating a decline of 3% from the year-ago quarter’s actuals.

UPS has an impressive earnings surprise history as shown in the chart below.

Q1 Earnings Whispers for UPS

Our proven model does not conclusively predict an earnings beat for UPS this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat, which is not the case here.

The company's Earnings ESP is -4.08%. This is because the Most Accurate Estimate is currently pegged at $1.36 per share, six cents below the Zacks Consensus Estimate. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

UPS currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Likely to Influence UPS’ Q1 Results

Shipping volumes at UPS are likely to have been hurt by geopolitical uncertainties and high inflation. The silver lining is that since the first quarter covered a period (January-March) of normal business and the new tariffs took effect in the second quarter, tariff woes are unlikely to get reflected in the numbers of the March quarter. We believe that more than the financial numbers, it is the guidance that investors will more closely watch.

Labor costs are likely to have been high, hurting United Parcel Service’s bottom-line performance in the March quarter. Low fuel costs are expected to have aided UPS’ bottom-line performance in the March-end quarter.  We expect expenses on fuel to decrease 5.1% from first-quarter 2024 actuals. Crude oil has been struggling in 2025, with prices sliding to multi-month lows. Tariff concerns, weakening consumer confidence and production increase by OPEC+ have all contributed to this downward pressure. 

Dismal Price Performance of UPS Stock

UPS stock has performed unimpressively on the bourses in a year. The stock has depreciated 32.9%, performing worse than its industry’s 29.7% decline in the same timeframe. The S&P 500 composite index rose 7% in the same time frame while the Zacks Transportation sector plunged 19.5%. UPS has also lagged its rival FedEx FDX and another industry player GXO Logistics GXO in a year.

One-Year Price Performance

UPS’ Valuation Stretched

UPS’ stock is expensive, trading at a forward sales multiple of 0.96, higher than the industry and  GXO Logistics and FedEx. UPS stock has a Value Score of C. Meanwhile, GXO Logistics and FedEx have a Value Score of B and A, respectively.

UPS’ P/S F12M Vs. Industry, FDX & GXO

Investment Thesis for UPS Stock

Due to the decline in shipping demand, volumes at UPS have suffered. UPS expects average daily volumes to decrease 8.5% in 2025 from 2024 actuals. A slowdown in online sales in the United States, apart from a softness in global manufacturing activity, has been hurting the demand scenario.

Moreover, a rise in inflation over the past couple of months has unsettled markets. Of late, U.S. markets have been characterized by a high degree of volatility amid uncertainty surrounding its trade policy and growing anxiety about a slowing economy.

Hefty tariffs on the nation’s biggest trading partners have given rise to fears of an economic slowdown. However, the recent signals of easing of the U.S.-China trade tussle bode well for UPS. Concerns over the sustainability of UPS’ dividends in this era of demand weakness represent a further challenge for this parcel delivery company. However, UPS’ expansion efforts look good. 

What Should Investors Do With UPS Stock?

It is worth noting that the company has the brand and the network to continue generating steady cash flows in the long run. This makes UPS a compelling long-term player in the transportation space. However, the near-term headwinds, including the tariff-induced uncertainties, are hard to ignore. Though the company has a solid track record of beating earnings estimates, it will be prudent for investors to stay away from investing in the stock for now and wait for the upcoming quarterly results to get more clarity on the company’s near-term prospects.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research