Can UPS Stock Beat the Market Over the Next 5 Years?​

The past five years have been challenging for United Parcel Service (NYSE: UPS) investors. Shares of the package delivery giant have plummeted 32% in that time. Is the outlook brighter if we look out to the next five years? It would be hard not to be.

Recent momentum is promising. UPS has risen 9% through the first six trading days of 2026, climbing 32% since bottoming out three months ago. At least four analysts boosted their price targets on the stock just last week. With a juicy dividend yield of 6.1%, UPS may offer a potent combination of capital gains alongside a hefty quarterly distribution.

Turnaround stories are never easy and clean, and a lot can happen with UPS. But let's start by taking a look back at the past five years before turning our attention to the future.

Image source: Getty Images.

Brown turns upside-down

UPS was initially an early leader in responding to the COVID-19 crisis. Folks turned to e-commerce and home delivery, and UPS was one of many transportation stocks to benefit. Revenue rose in the mid-teens for UPS in 2020 and 2021, following a decade of steady but uninspiring positive single-digit top-line growth.

Then the wheels started to come off, metaphorically speaking. Amazon (NASDAQ: AMZN) outgrew its dependency on UPS, so the two mutually agreed to a lighter load of the online retailer's growing shipping volume. Its SurePost program with the United States Postal Service for last-mile delivery also came undone at the end of 2024. It averted a 2023 strike by the UPS Teamsters union, but the subsequent five-year agreement locks in escalating labor costs annually through 2028. Throw in the tariff-saddled landscape of 2025 -- and the end of the U.S. de minimis exemption that ended duty-free status for low-value imports late last year -- and it's been a rough few years for UPS.

The scoreboard, as all of these events unfolded, is telling. UPS's revenue growth decelerated to 3% in 2022, and things only got worse after that. Revenue would decline 9% in 2023 and clock in flat in 2024, and by the time the numbers are in for last year it's expected to be a 3% top-line slide.

Keep on trucking

Around the time its shares were bottoming out in the fall, UPS warned of a 13% decline in shipping volume during the seasonally spiked fourth quarter. That outlook was upgraded to a relatively better 11% as the holiday season played out.

Last week's four price-target increases acknowledge the rough climate but suggest that the business is starting to stabilize. Analysts see a return to earnings growth on flat revenue performance. UPS has managed to increase its dividend every year through the malaise, but with a trailing payout ratio of 98%, there is no margin for error if the quarterly distributions are to keep inching higher.

UPS is reasonably priced at 15 times this new year's projected earnings if it can deliver on its bottom-line improvements. The stock is exceptionally priced if it can do better than just bottom out here. With pressure to attract income investors with its payouts and its reputational advantages, you probably don't want to bet against seeing UPS bounce back and beat the market in the next five years.

Rick Munarriz 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.