UPS Transformation at Risk: Can Company Overcome Amazon Threat?

UPS (UPS) is an attractive value stock for investors due to its 6.4% dividend yield and low price-to-earnings ratio of 14.3 times 2026 earnings expectations.

The company is undergoing a strategic transformation, shifting away from volume growth and toward higher-margin end markets such as small- and medium-sized businesses (SMBs), healthcare, and business-to-business (B2B) e-commerce deliveries.

This 'Amazon glide down' involves reducing Amazon delivery volume by 50% from the start of 2025 to the middle of 2026, which will result in upfront costs but ultimately lead to higher margins.

However, there are concerns that investors need to address before buying the stock. One issue is that UPS generates revenue from fuel surcharges charged to customers, which may not be sustainable over time.