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Shares of United Parcel Service (UPS) are down 24% over the past six months, following a downturn beginning in 2022 linked to inflation concerns. The company generated $5.9 billion in net income in the last four quarters but is heavily spending on dividends, which currently yield a record-breaking 6.7%.
UPS plans to improve profitability by reducing low-margin shipments, specifically cutting its deliveries to Amazon by half by summer 2026. This move will allow UPS to close 73 shipping centers and reduce annual operating time by 25 million hours, as the contract with Amazon has prompted a reassessment of their relationship to avoid diminishing returns.
Despite recent challenges, UPS maintains $5.1 billion in cash reserves, a high credit rating, and a stock valuation at 14.3 times trailing earnings, positioning it as a potential long-term investment opportunity.
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