UPS Stock Underperforming Into Earnings – What Comes Next?

United Parcel Service (UPS), a bellwether of the global economy, prepares to release its third-quarter 2025 earnings this morning. UPS stock has experienced a challenging year, with a YTD decline of 28% significantly underperforming the market. This performance reflects a confluence of factors, including evolving trade dynamics, strategic shifts within the company, and ongoing restructuring efforts.

Analysts are projecting an earnings per share (EPS) of $1.31 for Q3 2025, a substantial 25.6% decrease compared to the same quarter last year. The full fiscal year 2025 projected EPS is $6.44, down 16.6% from the previous year. These estimates reflect the challenges UPS has encountered, notably the impact of “de minimis” tariffs on low-value Chinese shipments.

These tariffs, introduced in Q2 2025, significantly impacted consumer demand, particularly affecting shipments from budget e-commerce platforms like Temu and Shein, resulting in a decrease in consolidated revenues to $21.2 billion from $21.8 billion year-over-year. Adjusted net income also fell to $1.55 per share from $1.79 per share year-over-year.

Adding to the pressure is UPS's strategic decision to reduce its reliance on Amazon, its largest customer, by over 50%. While this move aims to diversify UPS's revenue streams and focus on more profitable segments, it initially triggered a 5% decline in the company's share price following the announcement in January 2025, and has been a drag on performance since.

In response to these financial pressures, UPS has embarked on a comprehensive restructuring plan aimed at saving $3.5 billion. This plan includes facility closures, the layoff of 20,000 workers, and voluntary buyouts for unionized full-time drivers. These measures, while necessary to improve efficiency and profitability, also reflect the significant challenges the company faces in adapting to a rapidly changing market landscape.

Following the earnings release, CEO Carol Tomé and CFO Brian Dykes will host a conference call at 8:30 a.m. ET. The markets will be keenly focused on several key questions: How effective have the restructuring efforts been in mitigating the impact of declining revenues? What is the outlook for the holiday shipping season, and how will UPS navigate potential challenges related to labor negotiations and capacity constraints? What progress has been made in diversifying revenue streams and reducing reliance on Amazon? And finally, what is the long-term strategy for navigating the evolving e-commerce landscape and maintaining a competitive edge?

While the prevailing narrative surrounding UPS has been largely negative, the current challenges may present an opportunity for a significant turnaround. The aggressive cost-cutting measures, while painful in the short term, could lay the foundation for a leaner, more efficient organization.

Furthermore, the strategic shift away from Amazon, while initially disruptive, could ultimately lead to a more diversified and resilient revenue base. As Amazon builds out its own shipping network, this may allow UPS to focus on more profitable customers. In addition, UPS has a strong presence in specialized logistics, such as healthcare, which may prove to be a growth market.

The upcoming earnings release will be a crucial test for UPS, providing insights into the effectiveness of its strategic initiatives and its ability to navigate a rapidly changing market landscape. While the company faces significant challenges, including declining revenues, strategic shifts, and restructuring efforts, bulls suggest that a turnaround is possible.