Shares in United Parcel Service (NYSE: UPS), more commonly known as UPS, declined by 20% in the first half of 2025, according to data provided by S&P Global Market Intelligence. The decline comes as investors increasingly stress the company’s prospects of meeting its initial full-year guidance due to the ongoing trade tariff dispute negatively impacting delivery volumes. After missing its initial full-year implied earnings guidance in 2023 and 2024, the last thing investors want to see is management fail to meet its targets in 2025. Still, unfortunately, it’s a real possibility.
These are good questions because the former is a possibility, and so is the latter. The difference is that cutting the dividend is a potentially good outcome for most investors. Still, the uncertainty around it all isn’t good for UPS’ share price.
Starting with its earnings guidance, management began the year forecasting $89 billion in revenue and an operating margin of 10.8%, implying an operating profit of $9.61 billion. In addition, management told investors to expect $5.7 billion in free cash flow (FCF), which would help support $5.5 billion in dividend payments and $1 billion in share buybacks.