Are UPS Shares Offering Opportunity After 34% Drop and FedEx Volume Shifts in 2025?

Trying to figure out what to do with United Parcel Service stock right now? You’re definitely not alone. Over the past year, UPS has been on a bumpy road, with the share price down 34.5% in the last 12 months and a hefty 33.1% drop year to date. Look back over three and five years and that downward trend continues, showing declines of 40.8% and 42.2%, respectively. Even the most recent trading weeks have been choppy, as the stock slid 4.5% this past week and 1.8% over the last month. With all these moves, it’s clear the market’s perception of both risk and opportunity around UPS is shifting, and not all in the same direction.

So what’s really going on beneath those price swings? Here’s a clue: when we run UPS through a series of six respected valuation checks, it scores a perfect 6 out of 6, signaling meaningful undervaluation across every method we test. That’s not something you see every day, and it sets the stage for a deeper conversation about whether the current market pessimism is actually out of step with UPS’s true value. In the next section, we’ll break down exactly how each valuation approach views UPS right now, and I’ll reveal an even more insightful way to look at value that you won’t want to miss at the end.

Why United Parcel Service is lagging behind its peers

Approach 1: United Parcel Service Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a classic valuation tool that estimates what a company's shares should be worth today based on predicted future cash flows. The model projects the firm's free cash flows over the years ahead and then discounts those future values back to their present worth, giving an intrinsic value for the business as it stands now.

For United Parcel Service, the latest reported Free Cash Flow (FCF) stands at about $2.75 Billion. Analysts provide DCF projections for UPS up to five years out; after that, cash flows are extrapolated based on long-term trends. According to these projections, UPS’s Free Cash Flow is expected to steadily climb to $7.05 Billion by 2029 and eventually reach over $9.5 Billion by 2035, indicating robust underlying cash generation for the business.

Using these projections and the two-stage Free Cash Flow to Equity model, the estimated intrinsic value of United Parcel Service comes in at $163.84 per share. This is 49.4% higher than the current market price, signaling a very strong case for undervaluation based on long-term cash flow assumptions.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for United Parcel Service.

Our Discounted Cash Flow (DCF) analysis suggests United Parcel Service is undervalued by 49.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: United Parcel Service Price vs Earnings

Price-to-Earnings (PE) is widely considered the gold standard for valuing profitable companies like United Parcel Service. The PE ratio helps investors determine whether a stock’s price accurately reflects its earnings power, making it a straightforward yet powerful tool. Growth outlook and risk profile play a crucial role in what counts as a “normal” or “fair” PE for any business. Faster-growing or lower-risk companies typically justify higher PE ratios.

United Parcel Service is trading at a PE ratio of 12.26x. This is notably below both the Logistics industry average of 15.81x and the average for its peer group, which comes in at 17.67x. On the surface, this discount might point to undervaluation, especially if UPS’s fundamentals stack up well against its rivals.

To dig deeper, Simply Wall St developed its proprietary “Fair Ratio,” an advanced metric that considers not just industry or peer averages but also a company’s specific earnings outlook, profit margins, market cap, and business risks. This goes a step beyond raw comparisons by giving a more tailored sense of value, closely aligned to United Parcel Service’s unique financial profile. Currently, the Fair Ratio for UPS lands at 17.09x, which is significantly higher than its current PE. This gap suggests the market may be underestimating UPS relative to its earnings potential and risk profile.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your United Parcel Service Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, user-friendly tool that lets you combine your unique view of a company's future, such as your assumptions for fair value, future revenue, earnings, and profit margins, with the data to tell the story behind the numbers.

Narratives link a company's story to a forward-looking financial forecast and a fair value, making it easy for anyone to see how different outcomes, from bullish to bearish, can impact an investment decision. On Simply Wall St's platform, Narratives are available within the Community page, empowering millions of investors to explore different perspectives and instantly compare their fair value to the current market price to decide when to buy or sell.

An added advantage is that Narratives update dynamically as new information becomes available, like the latest earnings results or breaking news, ensuring your perspective always reflects the company's most current reality.

For United Parcel Service, for example, some investors see upside potential with a fair value of $132.37 per share, based on strong automation gains and global expansion, while more cautious investors set their fair value as low as $75.00, reflecting concerns about declining Amazon volumes and ongoing cost pressures.

Do you think there's more to the story for United Parcel Service? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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