United Parcel Service, Inc. is a global package‑delivery and logistics operator with an asset‑heavy network and historically high return on equity, combining steady cash generation with recent pressure on top‑line momentum.
Several fundamentals remain competitive: five‑year diluted EPS compounded at roughly 32.92% (5‑year EPS CAGR 0.3292), recent ROE sits in the mid‑30% range (most recent ROE ~34.3%), and gross margin is unusually high at about 63.7%, reflecting pricing power in core services. The company’s interest coverage is comfortably above conventional stress levels (interest coverage ≈ 7.74x), and operating cash flow has consistently exceeded reported net income — TTM operating cash flow of $8.45B versus TTM net income of $5.57B — which supports earnings quality and liquidity (Earnings Quality Analysis, Return on Equity (ROE)).
At the same time, there are clear areas of weakness. Shorter‑term earnings and revenue momentum have softened: one‑year diluted EPS growth is down about 3.6% and one‑year revenue‑per‑share growth is down roughly 2.6%, with revenue per share drifting from $107.14 (2024‑12‑31) to $104.31 (2025‑12‑31). Operating cash flow has also moderated from a recent peak of $10.12B (2024‑12‑31) to 8.45B TTM, and investing cash outflows have expanded (latest TTM investing cash flow ≈ -$4.74B), pressuring free cash flow dynamics while financing outflows remain sizeable (TTM financing ≈ -$4.14B) (Strategic Capital Allocation, Revenue & Net Income, EPS Diluted & Revenue per Share).
Key metrics to monitor going forward include whether operating cash flow stays above net income (TTM OCF $8.45B vs NI $5.57B), trends in revenue per share (most recent $104.31) and diluted EPS (most recent $6.56), movement in operating and net margins (latest operating margin 8.9%, net margin ~6.3%), changes in ROE trajectory, and capital deployment including investing outlays and financing flows; the company’s trailing P/E has also moved to about 15.1x and is worth watching for shifts in market valuation context (Profit Margin Trends, Revenue & EPS Growth, Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
UNITED PARCEL SERVICE INC's revenue in 2025 showed a stable mid‑year run near $21.2B–$21.6B (Q1–Q3) followed by an increase to $24.48B in the quarter ending 2025‑12‑31. Net income rose steadily through 2025, from $1.19B in Q1 to $1.79B in Q4, indicating quarter‑over‑quarter improvement in the most recent year. Year‑over‑year, Q4 2025 revenue is slightly below Q4 2024's $25.30B while net income in Q4 2025 is modestly above Q4 2024's $1.72B.
Looking further back, there are clear historical inflection points: large net income peaks in early 2021 (e.g., $4.79B in 2021‑03‑31 and multiple quarters above $3B in late 2021/2022) and an isolated net loss of –$3.35B in 2020‑12‑31. The most recent quarterly revenue was $24.48B and the most recent quarterly net income was $1.79B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Jan 2025 to Dec 2025, United Parcel Service Inc converts approximately 64¢ of every revenue dollar into gross profit (gross margin: 63.7%).After accounting for operating expenses and taxes and expenses, the company retains 6.3% as net profit margin, resulting in $5.57B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Jan 2025 to Dec 2025
Revenue composition by disclosure category for the latest period
Analyzing long-term margin stability and competitive positioning
UNITED PARCEL SERVICE INC's net profit margin shows material swings over the multi-year record. The series includes a notable trough at 1.6% in the quarter ending 2020-12-31 followed by a sharp peak at 13.2% in 2021-12-31; after that peak the net margin trended lower through 2022 and 2023, falling from the low double-digits into the high single-digits and mid single-digits by 2024–2025.
In the most recent year the net margin has been relatively stable in a narrow band: 6.4% (2025-03-31), 6.3% (2025-06-30), 6.1% (2025-09-30) and 6.3% (2025-12-31).
Understanding Profit Margins
Between Jan 2025 and Dec 2025, United Parcel Service Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
In the most recent year UNITED PARCEL SERVICE INC's trailing twelve-month operating cash flow has moved lower from $10.12B at 2024-12-31 to $8.45B at 2025-12-31, with a mid-year trough of $7.48B at 2025-06-30 and a partial rebound to $8.46B at 2025-09-30. Over the same recent quarters, trailing twelve-month net income has been relatively stable in a narrow range around $5.5–$5.9B (peaking at $5.86B on 2025-03-31 and most recently $5.57B). Weighting the latest quarters more heavily, operating cash flow remains higher than net income in each recent TTM period.
Looking further back, both metrics were materially higher in 2021–2022 ($14B–$15B range for operating cash flow and near $11B–$13B for net income) before the multi-year decline in cash flow beginning in 2022. The gap between operating cash flow and net income has narrowed since late 2024 but persists: at 2025-12-31, operating cash flow exceeds net income by $2.88B. The most recent trailing twelve-month *Operating Cash Flow* was $8.45B and the most recent *Trailing Twelve-Month Net Income* was $5.57B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
UNITED PARCEL SERVICE INC's ROE shows large historical volatility with extreme peaks in the mid-2010s (for example 847.2% at 2016-12-31 and several quarters above 200%) and another cluster of very high readings through 2019–2020 (e.g., 204.4% at 2020-12-31). After those peaks the series moved materially lower: ROE declined through 2021–2022 from the very high levels and by mid-2023 had come down into a lower band relative to prior peaks.
Over the most recent quarters the company’s ROE has been in a narrower 30–38% range. The series hit 35.0% (2024-03-31) then a recent trough of 30.9% (2024-06-30) before recovering to 37.4% (2025-03-31) and settling around the mid-30s thereafter (36.4% 2025-06-30; 34.8% 2025-09-30; 34.3% 2025-12-31). The most recent ROE observed was 34.3%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
UNITED PARCEL SERVICE INC's trailing twelve-month operating cash flow has moved down from a peak around $10.12B at 2024-12-31 to $9.12B at 2025-03-31 and hit a low of $7.48B at 2025-06-30 before rebounding modestly to about $8.45B through 2025-12-31. The recent few quarters show a stabilization in operating cash in the mid-$8B range after the mid-2025 dip.
Investing cash flow has been negative throughout the period, shifting from an unusually small outflow of -$217.0M at 2024-12-31 to larger outflows in 2025 (roughly -$3.14B to -$3.79B) and increasing to -$4.74B by 2025-12-31. Financing cash outflows moderated from -$6.85B at 2024-12-31 to around -$3.79B at 2025-09-30 before edging to -$4.14B in the latest twelve-month reading.
The most recent trailing twelve-month values are: Operating Cash Flow $8.45B, Investing Cash Flow $-4.74B, Financing Cash Flow $-4.14B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
UNITED PARCEL SERVICE INC's trailing twelve‑month price-to-earnings ratio has moved lower over the past year, falling from 22.0x at 2024-06 to 18.5x at 2024-12 and continuing down through 16.0x (2025-03) and 15.0x (2025-06) to a trough of 12.9x in 2025-09. The series shows a modest rebound in the most recent quarter, rising to 15.1x at 2025-12 after that September low.
The long-term series includes several pronounced historical spikes (for example 106.6x at 2020-12 and elevated readings in 2012–2013), but the most recent two years have been well below those peaks and exhibit a downward trend followed by the small uptick in the latest quarter. The most recent Price-to-Earnings ratio was 15.1x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.