Timing note: UPS is scheduled to release results at approximately 6:00 a.m. ET on Tuesday, July 28, 2026, with its earnings call at 8:30 a.m. ET the same day—so, based on the stated current date, the event is today rather than tomorrow. (investors.ups.com)
This is primarily an execution and margin-conversion quarter, not a volume-growth quarter.
UPS spent the first half of 2026 deliberately removing low-return packages—particularly Amazon and lower-yield e-commerce volume—while closing facilities, reducing staffing and outsourcing part of Ground Saver’s last-mile delivery to the USPS. The core question is whether those actions are now producing the promised improvement in unit costs and U.S. Domestic margins.
The headline estimates matter, but the stock’s reaction will probably depend more on:
Published consensus estimates vary slightly by provider:
| Metric | Q2 2026 consensus | Q2 2025 actual | Approx. change |
|---|---|---|---|
| Adjusted EPS | $1.65–$1.66 | $1.55 | +6% to +7% |
| Revenue | $21.7B–$21.9B | $21.2B | +2% to +3% |
Zacks puts consensus at $1.65 of EPS and $21.75 billion of revenue, while other aggregators are clustered around $1.66 and $21.7 billion–$21.9 billion. (tradingview.com)
UPS entered the quarter with the following company targets:
| Segment | Q2 revenue outlook | Q2 adjusted margin outlook |
|---|---|---|
| U.S. Domestic | Low-single-digit growth | 7.5%–8.5% |
| International | Low-single-digit growth | 13%–14% |
| Supply Chain Solutions | Low-single-digit growth | 9.5%–10.5% |
Using roughly 2% revenue growth and the midpoints of those margin ranges implies a consolidated adjusted operating margin around 9.4%. That would be a sharp sequential improvement from Q1’s 6.2% and modestly above Q2 2025’s 8.8%.
UPS’s Q1 results illustrated the central tension in the turnaround:
The problem was not simply weak demand. UPS identified approximately $350 million of short-term expenses, including Ground Saver transition costs, excess staffing, leased-aircraft expense, weather and casualty costs. Management said most of those pressures would abate in Q2. UPS nevertheless delivered $21.2 billion of Q1 revenue and $1.07 of adjusted EPS, both modestly above expectations. (investors.ups.com)
For Q2, watch three metrics together:
This is the cleanest scorecard. The company’s 7.5%–8.5% target compares with:
A result near 8% would demonstrate that Q1’s weakness was genuinely transitional. A result below 7.5% would suggest that network costs remain sticky even after a large workforce and capacity reduction.
UPS wants to restore a healthy positive spread between revenue-per-piece growth and cost-per-piece growth.
Revenue per piece should remain strong because of:
But investors should distinguish genuine pricing and mix gains from fuel-surcharge revenue, which generally offsets higher fuel expense rather than creating equivalent incremental profit.
The better signal would be cost-per-piece growth falling toward the low single digits, particularly in the second half.
UPS previously targeted:
The first quarter produced about $600 million of program savings, while 23 buildings were closed and nearly 25,000 operational positions had already been removed year over year. The company’s 10-Q also indicates that most of the approximately $1.2 billion Driver Choice separation charge should be recognized in Q2. That will create substantial GAAP noise, making adjusted results and cash-flow commentary more useful than reported EPS alone. (investors.ups.com)
UPS aimed to reduce Amazon volume by more than 50% from 2024 levels by June 2026. In Q1 it removed an average of approximately 500,000 Amazon packages per day, and Amazon had declined to 8.8% of consolidated revenue.
That means Q2 volume is likely to remain weak even if the underlying business is stabilizing. Published forecasts call for a roughly 5% decline in consolidated average daily volume. (tradingview.com)
Investors should therefore focus less on the absolute volume decline and more on:
A significant decline in packages can be acceptable if revenue is stable and operating profit rises. A simultaneous decline in packages and operating profit would be much harder to defend at this stage of the restructuring.
Q2 is the first fuller quarter following the transition of part of UPS Ground Saver’s last mile to the USPS.
In Q1, the rollout produced excess staffing and transition costs. UPS expected to tender roughly 1.5 million daily Ground Saver packages to the Postal Service during Q2, up from approximately 977,000 in Q1.
The strategic case is straightforward: handing off lower-density residential stops should increase the density and productivity of the packages UPS continues to deliver itself. The report should show whether those theoretical savings are appearing after USPS fees and other transition costs.
Questions for management include:
International was better than feared in Q1:
However, volume remained weak, with average daily volume down 6%. China-to-U.S. volume fell 18.3%, while Europe-to-U.S. volume declined 22.5%. UPS partially offset those declines through pricing, customer mix and growth in trade lanes that do not touch the United States.
Management’s Q2 margin target of 13%–14% remains below the 15.2% achieved in Q2 2025. The likely headwinds are:
The positive case is that trade shifts rather than disappears, allowing UPS to capture growth in intra-Asia and other international-to-international lanes. But these replacement lanes may not initially carry the same margin as China-to-U.S. traffic.
Supply Chain Solutions was Q1’s strongest positive surprise:
For Q2, management targeted a 9.5%–10.5% margin, compared with 8.0% a year ago.
The important drivers are:
UPS generated its first $3 billion healthcare-revenue quarter in Q1. Healthcare is strategically important because it can provide higher margins and greater customer retention than commodity e-commerce delivery.
UPS currently targets:
Published consensus is somewhat higher on revenue at approximately $90.3 billion, while EPS expectations near $7.10 imply a slight year-over-year decline. (tradingview.com)
UPS did not raise guidance after its Q1 beat because management cited fuel, consumer confidence and geopolitical uncertainty. The bar is higher this time: Amazon’s reduction and much of the network restructuring were supposed to be substantially complete by June.
Bullish
Acceptable/base case
Bearish
UPS’s dividend remains an important part of the investment case, but the planned $5.4 billion annual payout is close to the company’s approximately $5.5 billion free-cash-flow target. That leaves limited room for execution misses, acquisitions or material debt reduction.
Q2 cash flow will be distorted by Driver Choice payments and the annual pension contribution. Investors should look for:
UPS closed July 27 at approximately $112.98, up about 12% year to date and roughly 19% above its late-March low. Some turnaround progress is therefore reflected in the price, although the shares remain dependent on proof that operating profit can grow despite lower package volume.
That creates an asymmetric earnings setup:
The most important number is not EPS—it is U.S. Domestic adjusted operating margin.
UPS has already accepted the revenue and volume cost of shrinking Amazon and low-quality e-commerce exposure. Q2 must demonstrate the corresponding benefit: a smaller but more profitable network, improving package economics and a credible path to stronger margins in the second half and 2027.
A result around consensus, with U.S. Domestic margin near 8% and full-year guidance maintained, would constitute reasonable execution. The upside case requires evidence that savings are arriving faster than planned. The key downside risk is that costs remain sticky after the volume has already left the network.