MMarketMath

UPS

Slow growerQuality: Medium (55/100)1 red flag

United Parcel Service · Industrials · Air Freight & Logistics

$102.72

52w 82.00 – 122.41

20y monthly, adjusted

Mkt cap

$73.3B

P/E

13.1

P/FCF

15.3

FCF yield

6.5%

ROE

34.3%

Shldr yield

8.8%

div 7.4% + bb 1.4%

What today's price assumes

At $73.3B, the market is pricing in 4.0% annual free-cash-flow growth for the next decade (10% discount rate, 2.5% terminal growth). Over the last ten years, FCF actually grew -0.6% per year — the price asks for acceleration beyond the historical record.

Simple DCF per-share range: $73 · $73 · $91 (4% / base / optimistic growth). An estimate, not a target.

Adjust the assumptions yourself →

Historical multiple lens

At its own median P/OCF of 9.2× across 18 years, UPS would trade near $108/share (25th–75th percentile: $81–$123); it trades at 8.7× today.

Assumes the historical multiple regime persists — re-ratings can be permanent.

Growth record

Compound annual growth rates from as-filed 10-K data, split-adjusted

Rev 3y

−4.0%

Rev 5y

+0.9%

Rev 10y

+4.3%

EPS 5y

+33.6%

EPS 10y

+2.1%

FCF 5y

−1.1%

FCF 10y

−0.6%

Fundamentals

Fiscal 2007–2025, from SEC filings

Revenue

2007: $49.7B
2008: $51.5B
2009: $45.3B
2010: $49.5B
2011: $53.1B
2012: $54.1B
2013: $55.4B
2014: $58.2B
2015: $58.4B
2016: $61.6B
2017: $66.6B
2018: $71.9B
2019: $74.1B
2020: $84.6B
2021: $97.3B
2022: $100.3B
2023: $91.0B
2024: $91.1B
2025: $88.7B
$0$50.0B$100.0B
07
11
15
19
23

Net income

2007: $382.0M
2008: $3.0B
2009: $2.0B
2010: $3.3B
2011: $3.8B
2012: $807.0M
2013: $4.4B
2014: $3.0B
2015: $4.8B
2016: $3.4B
2017: $4.9B
2018: $4.8B
2019: $4.4B
2020: $1.3B
2021: $12.9B
2022: $11.5B
2023: $6.7B
2024: $5.8B
2025: $5.6B
$0$5.0B$10.0B
07
11
15
19
23

Free cash flow

2007: −$1.7B
2008: $5.8B
2009: $3.7B
2010: $2.4B
2011: $5.1B
2012: $5.1B
2013: $5.2B
2014: $3.4B
2015: $5.1B
2016: $3.5B
2017: −$3.7B
2018: $6.4B
2019: $2.3B
2020: $5.0B
2021: $10.8B
2022: $9.3B
2023: $5.1B
2024: $6.2B
2025: $4.8B
$0$5.0B$10.0B
07
11
15
19
23

Diluted shares (lower is better)

2008: 1.0B
2009: 1.0B
2010: 1.0B
2011: 991.0M
2012: 969.0M
2013: 948.0M
2014: 924.0M
2015: 906.0M
2016: 887.0M
2017: 875.0M
2018: 870.0M
2019: 869.0M
2020: 871.0M
2021: 878.0M
2022: 875.0M
2023: 860.0M
2024: 856.0M
2025: 850.0M
0500.0M1.0B
07
11
15
19
23

Margins

0%10%07101316192225
Net marginFCF marginGross margin

Capital returned (dividends + buybacks)

2007: $4.3B
2008: $5.8B
2009: $2.3B
2010: $2.6B
2011: $4.7B
2012: $3.8B
2013: $6.1B
2014: $5.1B
2015: $5.2B
2016: $5.3B
2017: $4.6B
2018: $4.0B
2019: $4.2B
2020: $3.6B
2021: $3.9B
2022: $8.6B
2023: $7.6B
2024: $5.9B
2025: $6.4B
$0$2.5B$5.0B$7.5B
07
11
15
19
23

Cash vs long-term debt

$0$10.0B$20.0B07101316192225
CashLT debt

Quarterly

Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.

Revenue by quarter

Q2'23: $22.1B
Q3'23: $21.1B
Q4'23: $24.9B
Q1'24: $21.7B
Q2'24: $21.8B
Q3'24: $22.2B
Q4'24: $25.3B
Q1'25: $21.5B
Q2'25: $21.2B
Q3'25: $21.4B
Q4'25: $24.5B
Q1'26: $21.2B
Q2'26: $22.8B
$0$10.0B$20.0B
23
24
24
25
26

Net income by quarter

Q2'23: $2.1B
Q3'23: $1.1B
Q4'23: $1.6B
Q1'24: $1.1B
Q2'24: $1.4B
Q3'24: $1.5B
Q4'24: $1.7B
Q1'25: $1.2B
Q2'25: $1.3B
Q3'25: $1.3B
Q4'25: $1.8B
Q1'26: $864.0M
Q2'26: $604.0M
$0$1.0B$2.0B
23
24
24
25
26
QuarterRevenueYoYNet incomeYoYEPSOCF
Q2'26$22.8B+7.6%$604.0M−52.9%0.71$859.0M
Q1'26$21.2B−1.6%$864.0M−27.2%1.02$2.2B
Q4'25 *$24.5B−3.2%$1.8B+4.1%2.10$3.3B
Q3'25$21.4B−3.7%$1.3B−14.8%1.55$2.5B
Q2'25$21.2B−2.7%$1.3B−8.9%1.51$348.0M
Q1'25$21.5B−0.7%$1.2B+6.6%1.40$2.3B
Q4'24 *$25.3B+1.5%$1.7B+7.2%2.00$3.3B
Q3'24$22.2B+5.6%$1.5B+36.6%1.80$1.5B
Q2'24$21.8B−1.1%$1.4B−32.3%1.65$2.0B
Q1'24$21.7B−5.3%$1.1B−41.3%1.30$3.3B
Q4'23 *$24.9B−7.8%$1.6B−53.5%1.88$2.4B
Q3'23$21.1B−12.8%$1.1B−56.4%1.31$2.2B
Q2'23$22.1B−10.9%$2.1B−27.0%2.42$3.2B

Track record

Compound annual growth by period. For debt and share count, negative is the good direction.

Series3y5y10y15y
Revenue−4.0%+0.9%+4.3%+4.0%
Operating cash flow−15.7%−4.2%+1.3%+5.4%
Free cash flow−20.1%−1.1%−0.6%+4.5%
EPS (diluted)−20.8%+33.6%+2.1%+4.6%
Equity−6.4%+89.9%+20.7%+4.8%
LT debt+10.8%+1.4%+7.6%+5.5%
Diluted shares−1.0%−0.5%−0.6%−1.1%
Stock price−10.8%−8.1%+3.2%+6.5%

$100, 3 years ago

$71vs $176 in SPY

-10.8% vs 20.7%/yr

$100, 5 years ago

$65vs $181 in SPY

-8.1% vs 12.6%/yr

$100, 10 years ago

$137vs $412 in SPY

3.2% vs 15.2%/yr

$100, 15 years ago

$256vs $813 in SPY

6.5% vs 15.0%/yr

The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)

Last 5 years

$-1.07

−$18.9B created / $17.8B retained

Last 10 years

$1.42

$30.8B created / $21.7B retained

Quality & capital discipline

Cash-based returns and how management deploys capital

Cash ROIC

21.2%

OCF ÷ (equity + debt)

OCF / EV yield

9.3%

MC vs 10× OCF

0.86

≤1 = priced under 10× OCF

Debt / FCF

4.9y

SBC / FCF

1.5%

Owner earnings

$4.7B

OCF − capex − SBC

OE yield

6.4%

Share count 5y

−1.1%

per year; negative = buybacks

Capital intensity

—

net PP&E ÷ revenue

Sales efficiency

$0.37

new PP&E per $1 new revenue, 5y

Growth engine (5y): reinvested 29.6% of operating cash flow at an incremental return of -11.7% — an organically fundable growth rate of about -3.5% per year (growth ≈ reinvestment rate × incremental ROIC).

Checklist

17 of 26 checks pass · 65%. Checks with structurally missing inputs are excluded.

Growth & Consistency

4/7

  • Revenue growth

    0.9% · 5y CAGR ≥ 5%

    fail

  • EPS growth

    33.6% · 5y CAGR ≥ 5%

    pass

  • FCF growth

    -1.1% · 5y CAGR ≥ 5%

    fail

  • Revenue rises consistently

    7 of 9 · up in ≥ 7 of last 10 years

    pass

  • FCF consistently positive

    9 of 10 · positive in ≥ 8 of last 10 years

    pass

  • Profitable every year

    10 of 10 · net income > 0 in ≥ 8 of last 10

    pass

  • Cash flow keeps up with sales

    -4.2% vs 0.9% · OCF CAGR ≥ 0.9× revenue CAGR

    fail

Profitability

4/6

  • Net margin

    6.3% · ≥ 8%

    fail

  • Operating margin

    8.9% · ≥ 10%

    fail

  • Gross margin stable or rising

    — · no drop > 2 pts over 3y

    na

  • Return on equity

    34.3% · ≥ 12%

    pass

  • Cash ROIC

    21.2% · ≥ 12%

    pass

  • FCF margin

    5.4% · ≥ 5%

    pass

  • Earnings back their cash

    OCF $8.4B vs NI $5.6B · OCF ≥ net income (latest FY)

    pass

Balance Sheet

3/5

  • Debt payable from cash flow

    4.9y · LT debt ≤ 3× FCF

    fail

  • Cash cushion

    25% · cash ≥ 50% of LT debt

    fail

  • Leverage

    1.45 · LT debt ≤ 1.5× equity

    pass

  • Equity positive and compounding

    $16.2B · equity > 0 and grew over ~5y

    pass

  • Interest burden

    13% · interest ≤ 15% of operating income

    pass

Capital Allocation

3/4

  • Share count flat or shrinking

    -1.1% · ≤ +0.5%/yr over ~5y

    pass

  • Stock comp restrained

    2% · SBC ≤ 15% of FCF

    pass

  • Distributions funded by FCF

    134% · dividends + buybacks ≤ 100% of FCF

    fail

  • Repurchases are a habit

    10 of 10 · buybacks in ≥ 5 of last 10 years

    pass

Valuation Discipline

3/4

  • FCF yield

    6.5% · ≥ 3%

    pass

  • Earnings multiple

    13.1 · P/E ≤ 25

    pass

  • Price asks less than history delivered

    4.0% vs -0.6% · implied FCF growth ≤ historical FCF CAGR

    fail

  • Shareholder yield

    8.8% · dividends + buybacks ≥ 2% of market cap

    pass

Red flags

Mechanical checks — a flag is a question to investigate, not a verdict

Distributions exceed FCF

Dividends plus buybacks exceeded free cash flow in the latest fiscal year.

Financial data

As filed in 10-Ks; per-share figures split-adjusted. $ in millions.

FYRevenueGross profitOp incomeNet incomeEPSOCFCapExFCFDividendsBuybacksSBCCashLT debtEquityShares
202588,661—7,8675,5726.568,4503,6854,7655,3981,000735,88723,58516,227850
202491,070—8,4685,7826.7510,1223,9096,2135,399500246,11221,03016,718856
202390,958—9,1416,7087.8010,2385,1585,0805,3722,2502203,20621,99817,306860
2022100,338—13,09411,54813.2014,1044,7699,3355,1143,5001,5685,60217,32119,786875
202197,287—12,81012,89014.6815,0074,19410,8133,43750087810,25519,78414,253878
202084,628—7,6841,3431.5410,4595,4125,0473,3742247965,91022,031657871
201974,094—7,7984,4405.118,6396,3802,2593,1941,0049155,23821,8183,267869
201871,861—7,0244,7915.5112,7116,2836,4283,0111,0116344,22519,9313,021870
201766,585—7,5294,9055.611,4795,227-3,7482,7711,8135843,32020,278994875
201661,610—7,6883,4223.866,4732,9653,5082,6432,6785913,47612,394405887
201558,363—7,6684,8445.357,4302,3795,0512,5252,7025742,73011,3162,470906
201458,232—4,9683,0323.285,7262,3283,3982,3662,6955362,2919,8562,141924
201355,438—7,0344,3724.617,3042,0655,2392,2603,8385134,66510,8246,474948
201254,127—1,3438070.837,2162,1535,0632,1301,6215477,32711,0894,653969
201153,105—6,0803,8043.847,0732,0055,0681,9972,6655243,03411,0957,035991
201049,545—5,6413,3383.333,8351,3892,4461,8188175193,03410,4917,9791,003
200945,297—3,5081,9681.965,2851,6023,6831,7515614301,5428,6687,6301,004
200851,486—5,3823,0032.948,4262,6365,7902,2193,5705165077,7976,7801,022
200749,692—5783820.361,1232,820-1,6971,7032,6394472,027———

Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.

Compare with peers →·10-K filings on EDGAR ↗