UPS stock has been trading below $140, prompting investors to question whether now is the right time to buy. Despite facing challenges in 2024, United Parcel Service is showing signs of recovery.
Management at UPS is optimistic about the company’s future earnings growth, particularly in the second half of the year. The company’s strategic plans involve expanding its presence in the healthcare sector and increasing revenue from small and medium-sized businesses.
Although UPS stock appears to be undervalued, there are still risks to consider. The company has experienced a decline in delivery volumes and has been grappling with higher labor costs due to a recent contract agreement.
In the first half of 2024, UPS expects a decrease in adjusted operating profit, but the second half is anticipated to see a significant increase. This improvement is attributed to the expected growth in delivery volumes and a favorable revenue per piece versus cost per piece scenario.
UPS is also focused on regaining customers lost during last year’s labor dispute and is implementing cost-cutting measures, including a reduction of 12,000 jobs and aiming for $1 billion in cost savings.
As the company starts to overcome the challenges from the first half of the year, investors are looking ahead to a more positive financial outlook. Analysts predict an increase in earnings per share for 2025, indicating a potential upward trend for UPS.
With a market capitalization of $115 billion, UPS is currently trading at a price below $140, making it an appealing option for investors seeking long-term growth potential.
