Trim 40-50% on 200 SMA breakdown; cap residual at 50% benchmark weight with ATR-calibrated stop at $96.50
Underweight maintained rather than escalated to full Sell because: (1) 200 SMA just broke—one day of confirmation is reasonable before full Sell; (2) $3B cost-savings program supports 12.6x forward P/E; (3) $5.9B cash and 1.18 current ratio provide liquidity cushion; (4) dividend still paid; (5) $96.50 stop provides defined risk 5.5% below current. Full Sell requires multiple compression to 10-11x and Q3 earnings confirmation of dividend funding distress.
| Position | Action |
|---|---|
| Trim 40-50% at market near $102 via TWAP over 5-7 trading days | Trim 40-50% |
| Relief bounce to $104.87 (10 EMA) | Trim additional 10% via limit order |
| Residual position cap | Cap at 50% of benchmark weight |
| Daily close at or below $96.50 | Hard stop triggered |
| Close below $98.26 (lower Bollinger band) on volume >10M shares | Escalate to full exit |
| Close above $108.76 (50 SMA) with volume confirmation and MACD histogram no longer widening | Re-enter position |
UPS is a structurally undervalued income-and-recovery play where the 6.3% dividend is secure on an annual basis (104% TTM coverage), the $0.49 breach of the 200 SMA is statistical noise given a compressed ATR of $2.69, and the forward P/E of 12.6x prices in a full cyclical trough — making the downside bounded by yield while the upside includes multiple expansion plus earnings recovery from the $3B cost-savings program.
| Indicator | Value | Signal |
|---|---|---|
| 10 EMA | 104.87 | bearish |
| 50 SMA | 108.76 | bearish |
| 200 SMA | 102.51 | bearish |
| Bollinger Upper | 116.75 | neutral |
| Bollinger Middle | 107.50 | neutral |
| Bollinger Lower | 98.26 | neutral |
| MACD Line | -1.78 | bearish |
| MACD Signal | -1.30 | bearish |
| MACD Histogram | -0.48 | bearish |
| RSI (14) | 38.43 | neutral |
| ATR (14) | 2.69 |
This report is AI-generated for informational and educational purposes only and is not investment advice or a recommendation to buy or sell any security. Full disclaimer.
When: Relief bounce to $104.87 (10 EMA) with RSI turning up and MACD histogram flattening
Then: Trim additional 10% via limit order
$0.49 breach of 200 SMA at $102.51 versus close of $102.02 is statistical noise, not regime change, given ATR of $2.69.
EV: +8.7% · concedes: Q2 seasonal FCF is genuinely weak at $166M; TTM P/E of 18.96x is elevated vs. forward 12.62x; 30-year Treasury at 2007 highs creates rate pressure; 2028 Teamsters contract is a known risk factor; Amazon insourcing is a real ongoing headwind; EPS could remain at $5.00 in bear case
UPS is a value trap—not a value opportunity—because the dividend is structurally underfunded on a full-year basis and being bridged by debt issuance, the business is in secular decline with accelerating EPS deterioration, and the 6.28% yield is a market-priced signal of dividend cut risk, not a floor.
· concedes: Q4 is seasonally strong (unlike Q2)
→ vs conservative: Forward P/E of 12.6x is built on consensus estimates anchored to a recovery narrative that Q1 and Q2 2026 earnings are actively contradicting with 30% sequential and 53% year-over-year collapses
→ vs conservative: Holding for dividend income is not prudent—it is denial, as the company is borrowing to fund the payout and the moment credit conditions tighten or earnings disappoint, the dividend gets cut, triggering a 15-20% gap down
→ vs conservative: Waiting for 'stabilization' on deteriorating fundamentals contradicts the premise of forward multiple valuation; cheap multiple will expand back to mid-teens as estimates are revised down
→ vs neutral: The July 28 breakdown candle on nearly 3x average volume WAS the confirmation; waiting for confirmation after a breakdown is what causes you to miss the move
→ vs neutral: Being 'neutral' on a broken chart with a broke income story is not risk management—it is hope masquerading as discipline
| neutral |
| VWMA (20) | 104.94 | bearish |
Support: 102.51 · 98.26 · 94.64 · 94.96 | Resistance: 104.87 · 107.5 · 108.76 · 117.18 · 117.72
Bearish technical setup with price below all three moving averages (10 EMA at $104.87, 50 SMA at $108.76, and 200 SMA at $102.51) for the first time in the visible window. The "death cross" alignment is fully intact. MACD histogram at -0.48 is widening, indicating accelerating downside momentum. RSI at 38.43 is in the lower half but not yet at the classic 30 oversold threshold. ATR has compressed from 3.34 to 2.69, suggesting volatility expansion is likely. VWMA at $104.94 sits well above price, confirming the sell-off was driven by genuine selling pressure. Key decision levels: bullish reclaim above $104.87 to BUY, bearish break below $98.26 to SELL. Stop-loss reference: ~$5.38 (2× ATR). Final recommendation: HOLD for existing longs; await reclaim or breakdown to initiate new positions.
Market Cap
$86.80 B
P/E (TTM)
18.96x
Forward P/E
12.62x
PEG Ratio
1.63
Price/Book
5.76x
EPS (TTM)
$5.38
Forward EPS
$8.08
Dividend Yield
6.28%
Beta
1.04
52-Week High
$122.41
52-Week Low
$82.00
50-Day Avg
$108.93
200-Day Avg
$104.26
FY2022 Revenue
100,338 ($M)
FY2023 Revenue
90,958 ($M)
FY2024 Revenue
91,070 ($M)
FY2025 Revenue
88,661 ($M)
FY2022 Operating Income
13,094 ($M)
FY2023 Operating Income
9,141 ($M)
FY2024 Operating Income
8,468 ($M)
FY2025 Operating Income
7,867 ($M)
FY2022 Net Income
11,548 ($M)
FY2023 Net Income
6,708 ($M)
FY2024 Net Income
5,782 ($M)
FY2025 Net Income
5,572 ($M)
FY2022 Diluted EPS
$13.20
FY2023 Diluted EPS
$7.80
FY2024 Diluted EPS
$6.75
FY2025 Diluted EPS
$6.56
FY2022 EBITDA
18,717 ($M)
FY2023 EBITDA
12,726 ($M)
FY2024 EBITDA
11,917 ($M)
FY2025 EBITDA
11,927 ($M)
FY2022 Gross Profit
21,014 ($M)
FY2023 Gross Profit
17,238 ($M)
FY2024 Gross Profit
16,356 ($M)
FY2025 Gross Profit
16,030 ($M)
Q2'25 Revenue
21,221 ($M)
Q3'25 Revenue
21,415 ($M)
Q4'25 Revenue
24,479 ($M)
Q1'26 Revenue
21,202 ($M)
Q2'26 Revenue
22,834 ($M)
Q2'26 Operating Income
930 ($M)
Q2'26 Net Income
604 ($M)
Q2'26 Diluted EPS
$0.71
Q4'25 Diluted EPS
$2.10
Q1'26 Diluted EPS
$1.02
FY2022 Total Assets
71,124 ($M)
FY2023 Total Assets
70,857 ($M)
FY2024 Total Assets
70,070 ($M)
FY2025 Total Assets
73,090 ($M)
Q2'26 Total Assets
71,267 ($M)
FY2022 Total Liabilities
51,321 ($M)
FY2023 Total Liabilities
53,543 ($M)
FY2024 Total Liabilities
53,327 ($M)
FY2025 Total Liabilities
56,835 ($M)
Q2'26 Total Liabilities
56,168 ($M)
FY2022 Stockholders' Equity
19,786 ($M)
FY2023 Stockholders' Equity
17,306 ($M)
FY2024 Stockholders' Equity
16,718 ($M)
FY2025 Stockholders' Equity
16,227 ($M)
Q2'26 Stockholders' Equity
15,067 ($M)
FY2022 Total Debt
23,521 ($M)
FY2023 Total Debt
26,729 ($M)
FY2024 Total Debt
25,652 ($M)
FY2025 Total Debt
28,590 ($M)
Q2'26 Total Debt
28,673 ($M)
FY2022 Net Debt
14,060 ($M)
FY2023 Net Debt
19,095 ($M)
FY2024 Net Debt
15,172 ($M)
FY2025 Net Debt
18,240 ($M)
Q2'26 Net Debt
19,831 ($M)
FY2022 Cash
5,602 ($M)
FY2023 Cash
3,169 ($M)
FY2024 Cash
6,112 ($M)
FY2025 Cash
5,887 ($M)
Q2'26 Cash
4,653 ($M)
FY2022 Working Capital
4,077 ($M)
FY2023 Working Capital
1,737 ($M)
FY2024 Working Capital
2,869 ($M)
FY2025 Working Capital
3,425 ($M)
Q2'26 Working Capital
2,664 ($M)
FY2022 Current Ratio
1.22
FY2023 Current Ratio
1.10
FY2024 Current Ratio
1.17
FY2025 Current Ratio
1.22
Q2'26 Current Ratio
1.18
FY2022 Operating Cash Flow
14,104 ($M)
FY2023 Operating Cash Flow
10,238 ($M)
FY2024 Operating Cash Flow
10,122 ($M)
FY2025 Operating Cash Flow
8,450 ($M)
FY2022 Capital Expenditure
(4,769) ($M)
FY2023 Capital Expenditure
(5,158) ($M)
FY2024 Capital Expenditure
(3,909) ($M)
FY2025 Capital Expenditure
(3,685) ($M)
FY2022 Free Cash Flow
9,335 ($M)
FY2023 Free Cash Flow
5,080 ($M)
FY2024 Free Cash Flow
6,213 ($M)
FY2025 Free Cash Flow
4,765 ($M)
FY2022 Dividends Paid
(5,114) ($M)
FY2023 Dividends Paid
(5,372) ($M)
FY2024 Dividends Paid
(5,399) ($M)
FY2025 Dividends Paid
(5,398) ($M)
FY2022 Buybacks
(3,500) ($M)
FY2023 Buybacks
(2,250) ($M)
FY2024 Buybacks
(500) ($M)
FY2025 Buybacks
(1,000) ($M)
FY2022 Net Business Acquisitions
(743) ($M)
FY2023 Net Business Acquisitions
(1,136) ($M)
FY2024 Net Business Acquisitions
+1,044 ($M)
FY2025 Net Business Acquisitions
(1,268) ($M)
Q2'25 Operating CF
348 ($M)
Q3'25 Operating CF
2,482 ($M)
Q4'25 Operating CF
3,302 ($M)
Q1'26 Operating CF
2,224 ($M)
Q2'26 Operating CF
859 ($M)
Q2'25 CapEx
(1,123) ($M)
Q3'25 CapEx
(970) ($M)
Q4'25 CapEx
(716) ($M)
Q1'26 CapEx
(1,031) ($M)
Q2'26 CapEx
(693) ($M)
Q2'25 FCF
(775) ($M)
Q3'25 FCF
1,512 ($M)
Q4'25 FCF
2,586 ($M)
Q1'26 FCF
1,193 ($M)
Q2'26 FCF
166 ($M)
Q2'25 Dividends Paid
(1,349) ($M)
Q3'25 Dividends Paid
(1,348) ($M)
Q4'25 Dividends Paid
(1,353) ($M)
Q1'26 Dividends Paid
(1,352) ($M)
Q2'26 Dividends Paid
(1,356) ($M)
Profit Margin (TTM)
5.08%
Operating Margin (TTM)
9.05%
Return on Equity (ROE)
29.60%
Return on Assets (ROA)
7.23%
Free Cash Flow (TTM)
$5.56B
Debt/Equity
189.9%
Revenue 4Y CAGR
-3.0%
EPS 4Y Trend
-50% from 2022
Operating CF (TTM)
~$8.5B
FCF (TTM)
~$5.6B
Dividend Coverage (FCF) TTM
~104%
Dividend Coverage (FCF) Q2'26
~12%
Goodwill 2022
$4.2B
Goodwill 2025
$5.8B
Pension Obligations
$6.6B+
Net PPE
$42B
2025 Net New Debt Issuance
$2.08B
2025 Financing Cash Flow
-$4.14B
2022 Unusual Gain
$2.44B
FY2022 Gross Margin
~20.9%
FY2025 Gross Margin
~18.1%
FY2022 Operating Margin
~13.0%
FY2025 Operating Margin
~8.9%
Strengths
Concerns
UPS presents a deeply contradictory fundamental picture: the stock trades at an attractive 12.6x forward P/E with a 6.28% dividend yield, yet faces deteriorating cash generation with FCF collapsing 49% from $9.3B (2022) to $4.8B (2025), while net debt has risen from $14.1B to $19.8B and the quarterly dividend coverage ratio has deteriorated to just 12% (Q2'26 FCF of $166M vs $1.36B dividend). Revenue has declined 11.7% from the 2022 peak and operating margins have compressed from 13.0% to 8.9%, though the market is pricing in a significant EPS recovery from $5.38 TTM to $8.08 forward EPS - a bet that hinges on successful execution of cost initiatives and a cyclical volume recovery. The dividend sustainability is the critical swing factor for the investment thesis, as capital returns now exceed free cash generation and are being partially funded by new debt issuance.
Macro: Hawkish macro backdrop with 30-year Treasury yield at highest since 2007; Polymarket pricing 85% probability of no Fed rate cuts in 2026 and 48% probability of a rate hike; US recession implied odds at 8%; oil prices rising on geopolitical tensions (Trump-Oman); Wall Street indexes lower on the week on risk-off sentiment.