Key Notes
- UPS reports adjusted third-quarter EPS of $1.69, above the $1.63 estimate, as revenue increases 6.7% to $22.9 billion.
- The delivery company raises its 2026 revenue forecast to $92.6 billion and adjusted EPS outlook to approximately $7.28.
- Management expects fourth-quarter revenue of about $25.7 billion, with holiday execution and cash generation remaining important for shareholders.
United Parcel Service Inc. (NYSE: UPS) reported third-quarter adjusted earnings of $1.69 a share and raised its full-year revenue and profit outlook, giving shareholders a stronger forecast ahead of the holiday shipping season.
The delivery company’s adjusted EPS exceeded the $1.63 pre-earnings estimate listed by Barchart. Revenue increased 6.7% to $22.9 billion, with growth across its domestic package, international and supply-chain businesses.
UPS now expects approximately $92.6 billion in 2026 revenue and adjusted EPS of about $7.28. Its October 27 earnings release also lifted the adjusted operating-profit outlook to $8.75 billion and the adjusted free-cash-flow target to $6.1 billion.
UPS Raises Its Full-Year Outlook
The updated forecast improves on the guidance UPS issued with its July results. The changes are:
- Revenue: approximately $92.6 billion, up $1.4 billion from the previous $91.2 billion outlook.
- Adjusted EPS: approximately $7.28, compared with $7.22 previously.
- Adjusted operating profit: approximately $8.75 billion, up from $8.65 billion.
- Adjusted free cash flow: approximately $6.1 billion for the full year.
For the fourth quarter, management expects about $25.7 billion in revenue and $3.3 billion in adjusted operating profit. Those figures imply an adjusted operating margin of roughly 12.8%, based on the company’s rounded forecasts.
The holiday quarter therefore remains central to delivering the annual targets. Chief Executive Carol Tomé attributed the stronger outlook to premium growth and greater network efficiency, saying UPS was entering peak shipping season with a more automated network.
For UPS stock, the release shifts attention toward execution against those higher expectations. The forecasts describe management’s outlook; they are separate from the results already earned in the September quarter.
Earnings Beat Needs a Year-Over-Year Comparison
Adjusted EPS of $1.69 was six cents, or about 3.7%, above the $1.63 estimate. It was nevertheless below the $1.74 reported on an adjusted basis a year earlier.
That comparison includes an important qualification. Third-quarter 2025 results contained a $330 million pretax sale-leaseback gain in Supply Chain Solutions, equivalent to $0.30 of EPS. Its presence in the earlier period complicates a simple reading of the year-over-year decline.
Consolidated adjusted operating profit was $2.054 billion, compared with $2.132 billion a year earlier. The adjusted operating margin declined to 9.0% from 10.0%, even as revenue expanded.
On a GAAP basis, UPS earned $1.37 a diluted share. The difference from adjusted EPS reflected a net $279 million charge, including transformation costs and a goodwill impairment, partly offset by a gain from selling MD-11 assets. Comparing the adjusted result with an adjusted estimate avoids mixing those accounting measures.
Domestic Pricing Supports Revenue Growth
The US domestic package business generated $14.865 billion in revenue, up 4.5%. Revenue per piece increased 6.1%, while adjusted operating profit rose 14.3% to $1.034 billion. Its adjusted operating margin improved to 7.0% from 6.4%.
Shipment trends were less strong than the sales headline. Average daily domestic package volume declined to 15.621 million from 16.150 million, a fall of roughly 3.3%. The quarter also contained 65 operating days, compared with 64 a year earlier.
Those figures show why higher revenue should not be interpreted as an equivalent increase in packages handled. Revenue per piece and the number of operating days also influenced the total. For shareholders, the improvement in domestic profitability provides a separate measure of progress.
International revenue increased 7.1% to $5.007 billion, supported by a 15.0% rise in revenue per piece. Adjusted operating profit reached $746 million, up 8.0%, with an adjusted margin of 14.9%.
Supply Chain Growth Comes With Charges
Supply Chain Solutions recorded the fastest revenue growth, increasing 18.2% to $2.981 billion. UPS attributed the expansion primarily to forwarding and logistics, including healthcare.
Adjusted operating profit was $274 million, compared with $536 million a year earlier. The prior-year sale-leaseback gain sits within this business, making the headline profit decline a different signal from the revenue increase.
The latest quarter also included a $182 million goodwill impairment associated with Supply Chain Solutions. Its GAAP operating profit was $92 million, and the adjusted operating margin was 9.2%. The impairment and the earlier asset-sale gain underline the importance of examining the reconciliation alongside the headline earnings beat.
Cash Generation Remains Important for Shareholders
Through September, operating cash flow totaled $5.986 billion, compared with $5.148 billion a year earlier. UPS’s reconciled free cash flow was $4.220 billion, up from $2.744 billion, after capital expenditure, disposal proceeds and other investing adjustments.
The company maintained its full-year capital-spending plan at approximately $3 billion and expected dividend payments of around $5.4 billion, subject to board approval. The higher adjusted free-cash-flow target is therefore relevant to both reinvestment and shareholder distributions.
As we previously reported, an earnings beat and year-over-year profit growth answer different questions. UPS illustrates that distinction while adding a higher forecast for the final quarter. Readers can track upcoming releases through our earnings calendar.
