UPS Stock Plummets 14.1% Amid Disappointing Earnings Report

UPS stock drops 14.1% after dismal Q4 and full-year 2024 results. Concerns arise over dividend sustainability as EPS and revenue growth falter.

Date: 08-02-2025

AI Rating: 4

Stock Performance and Yield
UPS experienced a 14.1% decline in stock price, marking its lowest level since July 2020. The stock's yield reached 5.9%, which, despite its attractiveness, raises concerns due to the company's ongoing challenges.

Earnings Per Share (EPS)
UPS's adjusted diluted EPS fell by a substantial 12.1%, indicating a downward trend that could sway potential investors, impacting perceptions of profitability and future performance.

Revenue Growth
Revenue growth for UPS was dismal, recorded at merely 0.1%. The failure to generate significant revenue growth underscores the inability to capitalize on previous pandemic-induced e-commerce growth, raising doubts about future expansion.

Net Income and Profit Margins
Although specifics on net income are not detailed, the overall decline in operating margins and the company's admission of declining margins highlight its financial difficulties and operational inefficiencies.

Strategic Changes
UPS announced plans to cut its relationship with Amazon, its largest but least profitable customer, by 50% by mid-2026. This could potentially improve margins but may also lead to a significant reduction in overall revenue, creating a controversial strategy during an already tough financial period.

Outlook
The outlook for 2025 includes a revenue guidance decrease to $89 billion coupled with an improvement in operating margins to 10.8%. However, this represents a slight regression in revenue relative to earlier performance, limiting investor optimism about short-term gains. The strategic pivot focused on long-term margin improvement may lead to volatility in stock performance.

Stocks: UPS AMZN