UPS Shares Dip Amid FedEx’s Weak Earnings Outlook

Shares in package delivery giant UPS (NYSE: UPS) fell 3.4% in pre-market trading today, reflecting wider concerns following a substantial decline at peer FedEx (NYSE: FDX). This decline followed the release of FedEx’s fiscal third-quarter 2025 earnings, which included disappointing news relevant to UPS.

FedEx’s Dismal Outlook

Recent comments from multiple transportation and industrial companies, including key players like 3M and Delta Air Lines, indicated a trend of either deferred sales or customers delaying purchases amid economic uncertainty. Such patterns impact short-cycle businesses like package delivery services, with FedEx’s projections underscoring a challenging landscape.

FedEx revised its full-year revenue forecast to a range described as “flat to slightly down year over year,” a shift from its previous guidance of flat sales for 2024. CFO John Dietrich highlighted that, “Our revised earnings outlook reflects continued weakness and uncertainty in the U.S. industrial economy, which is constraining demand for our business-to-business services.”

Implications for UPS Investors

As FedEx’s third-quarter ended on February 28, UPS’s first-quarter 2025 earnings will close on March 31. While FedEx reported acceptable results, its downgraded outlook likely relates to challenges affecting both companies in March. Consequently, UPS may experience similar pressures during this trading period.

Moreover, the noted decline in business-to-business deliveries could compress margins, as these services generally yield higher profits. Investors in UPS should prepare for potential short-term setbacks, though the company’s long-term growth prospects remain robust. Upside possibilities exist for investors looking to capitalize on buying opportunities during economic slowdowns, assuming the downturn is only temporary.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends 3M and FedEx. The Motley Fool recommends Delta Air Lines and United Parcel Service. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.