Parcel delivery company UPS (NYSE: UPS) beat Wall Street’s revenue expectations in Q1 CY2026, but sales fell by 1.6% year on year to $21.2 billion. The company expects the full year’s revenue to be around $89.7 billion, close to analysts’ estimates. Its non-GAAP profit of $1.07 per share was 4.2% above analysts’ consensus estimates.

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“I want to thank UPSers around the world for their hard work and efforts, and for pushing our transformation forward,” said Carol Tomé, UPS chief executive officer.

Company Overview

Trademarking its recognizable UPS Brown color, UPS (NYSE: UPS) offers package delivery, supply chain management, and freight forwarding services.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, United Parcel Service struggled to consistently increase demand as its $88.32 billion of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and is a sign of poor business quality.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Just like its five-year trend, United Parcel Service’s revenue over the last two years was flat, suggesting it is in a slump.

This quarter, United Parcel Service’s revenue fell by 1.6% year on year to $21.2 billion but beat Wall Street’s estimates by 1.1%.

Looking ahead, sell-side analysts expect revenue to grow 2.4% over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

United Parcel Service has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 10.7%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, United Parcel Service’s operating margin decreased by 5 percentage points over the last five years. Even though its historical margin was healthy, shareholders will want to see United Parcel Service become more profitable in the future.

In Q1, United Parcel Service generated an operating margin profit margin of 6%, down 1.8 percentage points year on year. The reduction is quite minuscule and shareholders shouldn’t weigh the results too heavily.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for United Parcel Service, its EPS declined by 7.3% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

We can take a deeper look into United Parcel Service’s earnings to better understand the drivers of its performance. As we mentioned earlier, United Parcel Service’s operating margin declined by 5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For United Parcel Service, its two-year annual EPS declines of 8.3% are similar to its five-year trend. These results were bad no matter how you slice the data.

In Q1, United Parcel Service reported adjusted EPS of $1.07, down from $1.49 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 4.8%. Over the next 12 months, Wall Street expects United Parcel Service’s full-year EPS of $6.74 to grow 11.5%.

Key Takeaways from United Parcel Service’s Q1 Results

It was good to see United Parcel Service narrowly top analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its adjusted operating income missed. Overall, this quarter could have been better. The stock traded down 2.5% to $105.38 immediately after reporting.

So should you invest in United Parcel Service right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).