It has been about a month since the last earnings report for United Parcel Service (UPS). Shares have added about 1% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is UPS due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for United Parcel Service, Inc. before we dive into how investors and analysts have reacted as of late.
Earnings Beat at UPS in Q2
Quarterly adjusted earnings of $1.76 per share increased 13.5% year over year. The figure beat the Zacks Consensus Estimate of $1.65 by 6.7%. Revenues rose 7.6% to $22.83 billion and surpassed the consensus estimate of $21.75 billion by 5%. Growth across all three segments supported the top line, while International revenue per piece climbed 18.9%.
UPS' Domestic Revenues Rise on Strong Pricing
U.S. Domestic Package revenues increased 6% year over year to $14.93 billion, driven by a 9.3% improvement in revenue per piece. Average daily package volume declined to 16 million from 16.6 million a year earlier, indicating that pricing more than offset lower shipment activity.
Adjusted operating profit advanced 21% year over year to $1.19 billion. The adjusted operating margin expanded 100 basis points to 8%, even as adjusted cost per piece increased 8% to $13.09. The margin improvement reflects progress from UPS’ network reconfiguration and efficiency initiatives.
United Parcel Service’s International Sales Jump
International Package revenues increased 12.5% year over year to $5.04 billion. The segment delivered the strongest revenue growth among UPS’ operating businesses, aided by the sharp increase in revenue per piece.
Adjusted operating profit declined 8.7% year over year to $623 million. The adjusted operating margin contracted to 12.4% from 15.2% in the prior-year quarter, showing that higher revenue did not translate into operating profit growth as segment expenses increased.
UPS Supply Chain Business Delivers Profit Growth
Supply Chain Solutions revenues rose 7.8% year over year to $2.86 billion. The improvement was primarily driven by growth in forwarding and logistics operations, including the healthcare business.
Adjusted operating profit increased 37.3% year over year to $291 million. The adjusted operating margin expanded 220 basis points to 10.2%, reflecting stronger operating leverage and making Supply Chain Solutions the company’s most improved segment on a profitability basis.
United Parcel Service Expands Adjusted Margin
Consolidated adjusted operating profit rose 12% year over year to $2.10 billion. The adjusted operating margin increased to 9.2% from 8.8%, supported by profit growth in the U.S. Domestic Package and Supply Chain Solutions businesses.
On a GAAP basis, operating profit fell to $930 million from $1.82 billion, while diluted earnings declined to 71 cents per share from $1.51. Results included $1.17 billion of pretax transformation strategy costs, primarily related to employee separation expenses associated with the Driver Choice Program.
UPS Network Changes Produce Cost Benefits
UPS generated approximately $1.2 billion of benefits from its network reconfiguration and Efficiency Reimagined initiatives during the first six months of 2026. Management expects these programs to deliver approximately $3 billion of benefits for the full year.
The company completed its planned Amazon volume reduction and related network changes during the period. UPS has reduced its operational workforce and closed daily operations at certain facilities as it aligns network capacity with its changing shipment mix. The broader initiatives are expected to conclude by 2027.
United Parcel Service’s Free Cash Flow More Than Doubles
Cash provided by operating activities increased to $3.08 billion in the first six months of 2026 from $2.67 billion a year earlier. Capital expenditures declined to $1.72 billion from $2 billion.
Free cash flow more than doubled to $1.57 billion from $742 million. The improvement gives UPS greater flexibility to fund network investments, meet financial obligations and return capital to shareholders.
UPS’ 2026 Outlook Raised
Management raised its full-year consolidated revenue outlook to approximately $91.2 billion from the prior view of $89.7 billion. UPS also lifted its adjusted operating profit target to approximately $8.65 billion and adjusted earnings guidance to approximately $7.22 per share.
Capital expenditures are still projected at roughly $3 billion. Dividend payments are expected to total around $5.4 billion, subject to board approval, while the effective tax rate is projected to be approximately 23%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.4% due to these changes.
VGM Scores
Currently, UPS has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UPS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>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
United Parcel Service, Inc. (UPS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).