UPS Could Thrive in a Post-Amazon World

So far this year, shares of United Parcel Service (NYSE: UPS), better known as UPS, have been choppy. On one hand, investors know full well that the transportation company is in transition mode.

On the other hand, impatience has led many in the market to sell or avoid the delivery company's shares on concerns that its turnaround efforts will fail to meet expectations. While frustrating for existing investors, this signals a strong opportunity for those who have yet to enter a position.

I believe that what appears to be a headwind is, in actuality, a major tailwind for the company and the stock. Therefore, the market's lukewarm sentiment regarding this transportation stock works in your favor.

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Why UPS is phasing out Amazon deliveries

Early last year, UPS first unveiled its plans to reduce its Amazon delivery volume by 50% before the second half of this year. UPS's reasoning for this was pretty straightforward. While Amazon was UPS's largest customer by revenue, making up 11.8% of overall sales in 2024, the comapany's orders made up 20% to 25% its total U.S. package volume.

By removing this low-margin package delivery volume, UPS could both reduce labor costs and devote newly opened-up capacity to delivering higher-volume packages. Yet, while there is big long-term potential with this plan, so far, other concerns have weighed more heavily on the minds of UPS stock investors.

Throughout 2025, issues like trade tensions and a weakening macro backdrop negatively affected shipping demand. Results fell short of expectations, and the company temporarily stopped issuing guidance. All of this led to a drop in investor confidence, triggering a sharp pullback in shares.

Although UPS shares have bounced back since late 2025, the stock has since stayed rangebound around $100 per share. Despite recently delivering better-than-expected results, as mentioned above, investors have been impatient about the pace of improved operating results.

Now's the perfect time to hop aboard

UPS's turnaround may not be happening as quickly as the market would like, but it is indeed happening. Overall, UPS's revenue and earnings declined year over year. Again, however, this is due to the Amazon phase-out. In its pivot toward higher-margin customers, UPS continues to make improvements.

As discussed on its latest post-earnings conference call, daily volumes among small and medium-sized businesses (SMBs) rose 1.6% during the first quarter of 2026. Overall revenue per package was up 6.5%, while the company's revenue from delivering healthcare products hit a record $3 billion. Further incremental improvements could follow.

Management reiterated its 2026 guidance. Sell-side analysts remain bullish as well, anticipating earnings per share (EPS) to stabilize in 2026 before rising 12.2% to $8 per share in 2027. In the years ahead, shares could rally in line with earnings growth or perhaps even benefit from multiple expansion.

UPS trades at 14 times forward earnings but has traded at between 15 and 20 times earnings in the past. While you wait for further improved results, the stock remains a high-yield dividend stock. Currently, shares have a forward dividend yield of 6.6%. UPS is a strong opportunity despite the mixed sentiment.

Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool has a disclosure policy.