Is UPS Really a Bargain Below $105? What the Latest Results Tell Us

United Parcel Service has struggled significantly, with disappointing performance spanning multiple years through 2024. Yet recent developments suggest the shipping logistics landscape may be shifting in UPS’s favor. The company’s third-quarter performance, combined with CEO Carol Tomé’s strategic decisions, presents a potential turning point worth examining for investors at current valuations.

The Q3 Surprise That Changed the Narrative

On October 28, 2025, UPS released third-quarter results that caught many market participants off guard. While revenue declined 2.6% year-over-year to $21.4 billion—slightly above Wall Street’s $20.8 billion expectation—the real story lay in profitability metrics. The company’s adjusted earnings per share reached $1.74, substantially exceeding the consensus estimate of $1.30.

CEO Carol Tomé’s aggressive restructuring efforts underpinned these results. UPS reduced its operational workforce by 34,000 positions in the first nine months of 2025, surpassing its initial 20,000-headcount reduction target. Management also eliminated 14,000 management roles. These moves weren’t merely cost-cutting exercises; they reflected a deliberate shift toward operational efficiency and profitability over volume.

The market responded positively, with UPS shares climbing approximately 17% since early October. More significantly, Carol Tomé’s outreach to the new U.S. Postmaster General yielded tangible results: a preliminary agreement positioning UPS for middle-mile package transportation while the USPS handles final-mile delivery. This partnership could open new revenue channels previously unavailable to the company.

Strategic Risks Still Looming

Despite positive momentum, uncertainties persist. The Trump administration’s tariff policies pose particular challenges for UPS’s small-to-medium-sized business customers, as Carol Tomé acknowledged during the earnings call. “Next year is when you’re going to feel the full brunt of some of these tariffs,” she warned—suggesting that near-term headwinds could pressure shipment volumes.

The company’s dramatic decision to reduce Amazon business volumes remains contentious. Tomé characterized this move as “the most significant strategic shift in our company’s history,” recognizing that success or failure will significantly impact her legacy and the company’s trajectory.

Additionally, dividend sustainability concerns linger. UPS distributed $4 billion in dividends during the first nine months of 2025 while generating only $2.7 billion in free cash flow—a troubling gap. However, CFO Brian Dykes suggested during the earnings call that UPS should “generate significantly more free cash flow over time,” with restructuring expected to improve both profitability and cash generation. The company’s push into higher-margin healthcare logistics represents another avenue for improvement.

Who Should Consider UPS at These Levels?

Value investors may find UPS attractive at current levels. The forward price-to-earnings ratio of 13.6 appears reasonable, particularly as the worst of the company’s challenges appears to have passed. Growth-focused investors, conversely, may find limited appeal, as UPS is unlikely to deliver explosive expansion regardless of operational improvements.

Income-oriented investors should pay particular attention. The forward dividend yield of 6.6% proves enticing, especially if dividend stability can be maintained. CEO Carol Tomé and management have consistently expressed commitment to the dividend program, suggesting cuts remain unlikely barring a dramatic deterioration in cash generation.

The Bottom Line

UPS stock below $105 merits consideration for specific investor profiles. Value and income investors—particularly those comfortable with cyclical logistics exposure—may find the risk-reward proposition compelling. The company’s operational improvements, strategic partnerships emerging under Carol Tomé’s leadership, and attractive valuation offer reasonable downside protection while potential upside exists if management executes on cash flow improvements. Growth investors, however, should likely look elsewhere for more robust expansion potential.