UPS own stock? Here’s what the big news from FedEx means for you.

FedExhis (NYSE: FDX) the recent earnings report was not good and the stock was suddenly sold off in response. But what does it mean for his perennial rival, UPS (NYSE: UPS)? Here’s a look at what happened to FedEx and what investors can expect when UPS releases its third-quarter 2024 earnings in about a month.

FedEx did not deliver good news

No point in sugar coating matters. FedEx’s first-quarter 2025 earnings report was weaker than expected, and management promptly cut its full-year 2025 revenue and earnings guidance:

• Full-year revenue is expected to grow at a low-single-digit rate compared to previous guidance for a low- to mid-single-digit rate.

• Full-year earnings per share before accounting adjustments are expected to be $17.90 to $18.90 compared to previous guidance of $18.25 to $20.25.

Headline numbers help frame the picture, but the details are everything, and they’re especially interesting to UPS.

FedEx quarter weaker than expected

FedEx CEO Raj Subramaniam discussed the matter on the earnings call, saying the demand environment was weaker than expected in the quarter, “particularly in the US domestic package market.” He singled out FedEx’s higher-margin business-to-business (B2B) deliveries as a weak area and said: “We have seen increasing demand for our low-yield services.”

It gets worse. Total average daily volume in the US domestic market was down 0.4% year-over-year.

The only bright spot was US domestic revenue per package (yield), which improved from $13.82 in Q1 2024 to $13.87 in Q1 2025. However, this represents a significant sequential reduction from $14.20 reported in the previous quarter.

What it means for UPS investors

The update is concerning for UPS investors for a few reasons. First, the weakness cited by FedEx in US B2B deliveries indicates that there is unlikely to be any significant improvement in business conditions for UPS. That’s not good news, as UPS’s last earnings report already saw the company report a 4.6% year-over-year decline in average daily US B2B volume.

Second, along with margin pressure from a potential continued decline in B2B volume, UPS could also suffer from the shift to lower-yielding deliveries cited by FedEx. In fact, UPS is already suffering from this impact, as its higher-yielding US next-day air volumes decline much more than its lower-yielding ground revenues in 2024.

Data source: UPS presentations.

The story continues

With FedEx also discussing shifting volume to lower-yield deliveries, it’s reasonable to expect UPS to face continued pressure on this issue. Indeed, FedEx management said its revenue was lower than expected in the quarter. Furthermore, FedEx’s Subramaniam said, “We do not anticipate a significant rebound in the industrial environment for the rest of this calendar year.”

Third, as you can see in the table above, UPS reported a 0.7% volume increase in the second quarter (ended June 30), but FedEx’s US domestic volume was down 0. 4% in the quarter ended August 31. This is a worrying sign. for UPS, as a continued improvement in US delivery volumes is a key part of its domestic plans, and the industry needs the volume growth to try to reduce overcapacity in the industry.

Is UPS stock a buy?

The key question for UPS investors is this: Already holding full-year guidance for significantly weaker-than-expected margin performance (tied to a shift to lower-yielding deliveries, which FedEx recently cited), is bad news already priced in UPS. stock? It would be nice to think so, and given the market’s pessimism, the stock likely has significant upside, provided it holds its guidance for the full year.

This is usually a favorable situation. Unfortunately, UPS’s track record has not been good lately, and FedEx’s recent update does not say that conditions are improving. As such, there’s still reason to be cautious about UPS’s near-term outlook, so keeping a close eye on the stock might make more sense before buying.

Thinking longer term, lower interest rates will inevitably boost economic growth, which usually means increased parcel delivery volumes. FedEx and UPS are likely to recover from this, and long-term investors willing to tolerate the potential for short-term bad news may be tempted to buy UPS and ride out any volatility.

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Lee Samaha has no position in any of the shares mentioned. The Motley Fool has positions in and recommends FedEx. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.

UPS own stock? Here’s what the big news from FedEx means for you. was originally published by The Motley Fool