FedEx Just Took UPS's Spot as the Biggest U.S. Parcel Firm. Which Stock is a Smarter Buy in 2026?

Size can be important for many businesses because economies of scale are important in some industries. That is true in the parcel delivery business, where FedEx (NYSE: FDX) and United Parcel Service (NYSE: UPS) are fierce rivals. It's notable that FedEx's market cap just surpassed UPS's, but that alone isn't enough to distinguish between these two industry leaders. Here's a closer look at which of these two stocks is the smarter buy in 2026.

FedEx and UPS are both industry giants

FedEx's market cap is around $83 billion. UPS' market cap is also around $83 billion. What's really notable here is that UPS' market cap has declined by 40% over the past five years while FedEx's market cap has increased by 15%. The divergence between these two industrial stocks is the real story, as Wall Street clearly believes that UPS isn't as valuable a business as it once was.

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There's some truth in that statement, given that the company has undertaken a material business overhaul. The express goal is to become a smaller, leaner, and more nimble business. The turnaround effort has involved divesting older delivery assets, investing in new facilities and technology, and shedding employees. The company even decided to shift away from customers who ship large volumes but only offer UPS low profits on that business. FedEx has been making changes to its business, as well, but they haven't been nearly as dramatic.

Is FedEx or UPS the better buy?

UPS believes 2026 will be an inflection point in its turnaround effort, with the second half of the year stronger than the first. In 2025, there were early signs of progress as the company's revenue per piece rose in the U.S. market despite declining total revenues. That's basically what the company has been aiming for, as it refocuses on its most profitable customers and sheds assets that are less productive. If the company's financial performance continues to improve, Wall Street may be willing to afford it a higher valuation.

That brings up the discussion of valuation. FedEx currently has a price-to-sales ratio of 0.95x compared to a five-year average of 0.67x. Its price-to-earnings ratio is nearly 20x versus a five-year average of 15x. And its price-to-book ratio is 3x compared to a five-year average of 2.3x. It looks a bit expensive, historically speaking.

UPS, by comparison, looks historically cheap. Its P/S ratio is 0.97x compared to a five-year average of 1.35x. Its P/E ratio is 15x compared to a longer-term average of 17x. And its P/B ratio is 5.2x compared to a five-year average of 7.8x. While it makes sense that UPS appears relatively cheap, given the turnaround situation, that doesn't change the fact that value investors will likely find the stock more appealing than FedEx right now.

FedEx probably has more growth appeal

That said, for growth-oriented investors, buying what amounts to a turnaround stock probably doesn't make much sense. So, for some investors, FedEx is probably a more appropriate pick in 2026. Notably, FedEx just upped the low end of its guidance for fiscal 2026. That hints that the business is performing better than management had originally expected, which is clearly a good sign.

Given the massive, complex logistics networks FedEx and UPS have built, competition from outsiders isn't likely to be a major headwind. And continued growth in e-commerce should support both companies in the years ahead. Indeed, few companies can marshal the resources of an Amazon (NASDAQ: AMZN) to build out their own private parcel delivery services. So, in the end, both FedEx and UPS are interesting in 2026, but for different types of investors.

Reuben Gregg Brewer 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 recommends FedEx. The Motley Fool has a disclosure policy.