Where Will UPS Be in 1 Year?

UPS (NYSE: UPS) recently closed the books on 2025. It was another down year for the global logistics giant, as both its revenue and earnings declined. The company battled global trade headwinds and a strategic decision to reduce its reliance on its top customer, Amazon.

Despite those weaker financial results, 2025 was a year of progress for the company. It anticipates further improvement in 2026. Here's a look at what has transpired over the past year and where the company expects to be a year from now.

Image source: Getty Images.

2025 rewind

UPS' revenue declined by nearly 3% in 2025 to $88.7 billion, while its adjusted earnings per share fell by over 7% to $7.16. The main factor driving the revenue decline was the company's strategic decision to reduce the volumes it ships for Amazon by 50% by the end of this year. At its peak, Amazon accounted for 20% to 25% of UPS' U.S. network volume. However, the e-commerce giant only contributed around 12% of its revenue because these volumes are less lucrative.

The company has been working to offset the impact of this volume reduction through cost saving and investing to expand its higher-margin revenue streams. The company eliminated 48,000 positions, closed 93 buildings, and deployed automation at another 57 facilities last year as part of an initiative to deliver $3.5 billion in annualized cost savings, which it achieved.

UPS also invested in expanding its complex logistics capabilities. It completed its acquisitions of Frigo-Trans and BPL last January to bolster its complex healthcare logistics solutions in Europe. It followed that up by closing its $1.6 billion purchase of Andlauer Healthcare Group in November, accelerating its expansion as a global leader in complex healthcare logistics. These deals helped grow the company's global healthcare revenue to $11.2 billion.

Looking ahead

UPS expects the coming year will mark an inflection point in its turnaround strategy. The focus during the first half of the year will be on the continued pivot away from Amazon. Revenue will continue to decline as it delivers fewer volumes for the e-commerce giant. As a result, profit margins will remain under pressure as the company continues to close buildings, phase out leased aircraft, and reduce its workforce. It plans to cut another 30,000 positions this year and close another 24 buildings in the first half. These moves should enable the company to deliver an additional $3 billion in cost savings from its Amazon volume-reduction strategy by the end of the year.

The turning point should come in the second half of the year. Revenue should begin to rise as volumes from non-Amazon customers grow. Likewise, its profit margins should improve as it benefits from the cost-saving initiatives it implemented in the first half.

UPS expects to generate $89.7 billion in revenue this year, a $1 billion, or 1.1% increase from last year. The company anticipates its adjusted earnings per share to be about flat with 2025's level, which included a $0.30 per share benefit from certain sale-leaseback transactions last year. Meanwhile, the logistics giant expects to generate $6.5 billion in free cash flow this year, a $1 billion improvement from 2025. That will give it a bit more cushion after its $5.4 billion in annual dividend payments.

Trimmer and ready to grow

UPS made significant progress on its turnaround strategy last year. However, it still has some work to do in the early part of 2026. That puts it on pace to end this year as a much leaner and more agile company, poised to deliver growth and margin expansion. Additionally, its dividend should be on a much more sustainable foundation. As a result, its stock price could be higher in a year as its strategy begins to drive growth and improved profitability.

Matt DiLallo has positions in Amazon and United Parcel Service. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool has a disclosure policy.