United Parcel Service Inc

Equity Research 28 July 2026 | 3:06PM EDT

United Parcel Service Inc. (UPS) 2Q26 EPS Beat; Domestic Margin Looks to Improve in 2H; Buy on Improved Profit Runway

UPS 12m Price Target: $132.00 Price: $112.95 Upside: 16.9% BUY Jordan Alliger Bottom Line: UPS (Buy rated) reported 2Q26 EPS on an adjusted | Goldman Sachs & Co. LLC basis of $1.76 per share v. GS/Visible Alpha consensus at Paul Stoddard $1.64/1.66 p/s. The stronger-than-forecast RPP in Domestic and | Goldman Sachs & Co. LLC 8% margin at the midpoint of their 7.5%-8.5% guide (above our outlook for 7.6%) led to the better-than-expected earnings in the Andrzej Tomczyk, CFA | Goldman Sachs & Co. LLC quarter. Importantly, RPP growth was above CPP growth in 2Q26, reflecting that the actions taken concurrent with the drawdown in AMZN volumes could be pointing to improved profitability in Key Data _____________________________________ Market cap: $96.1bn Domestic over the course of the 2H on a YOY basis. Net, net it was Enterprise value: $115.9bn 3m ADTV: $595.2mn encouraging that Domestic margin exceeded our forecast, with United States strong yields and somewhat better overall Domestic volumes. Americas Transportation M&A Rank: 3

Net, net while International headwinds and the shift of earnings GS Forecast __________________________________ 12/25 12/26E 12/27E 12/28E (relative to consensus) from 3Q into 4Q is likely causing the adverse Revenue ($ mn) New 88,661.0 91,894.8 97,742.8 103,091.5

share price reaction today (overdone, in our view), we reiterate our Revenue ($ mn) Old 88,661.0 90,755.7 96,175.4 101,377.9 EBITDA ($ mn) 12,077.0 12,538.5 13,768.5 14,686.9 Buy rating on the back of still-attractive valuation (13.5x NTM) EBIT ($ mn) 8,331.0 8,601.1 9,832.7 10,739.0

as well as the in-line Domestic EBIT and expected margin EPS ($) New EPS ($) Old improvement runway; also, UPS’s EPS guide moves to $7.22 per P/E (X) Dividend yield (%) 6.5 5.8 5.8 5.8 share, or higher by about the magnitude of the beat. Net debt/EBITDA (X) 1.6 1.6 1.3 1.1

Should the company execute on its premium revenue growth on a 6/26 9/26E 12/26E 3/27E EPS ($) lower cost base, we believe the opportunity to expand margin on a quarterly basis will become more evident. While UPS may need to GS Factor Profile ______________________________ Growth demonstrate more than one quarter of Domestic margin improvement as well as at least a typical seasonal peak demand Financial Returns

season before investors gain full confidence in the turnaround (with Multiple

positive growth on an ex-Amazon basis), we do think that showing Integrated this margin and volume recovery would catalyze the shares which have significantly lagged the broader transport space on YTD basis Percentile 20th 40th 60th 80th 100th

(up 7% vs. the group at up 36%). UPS relative to Americas Coverage UPS relative to Americas Transportation We recognize that the company is in prove it mode with both Source: Company data, Goldman Sachs Research estimates. Domestic margin repair, as well as a meaningful step-up in 4Q See disclosures for details. International margin needed to hit full-year expectations. Plus,

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs United Parcel Service Inc. (UPS)

United Parcel Service Inc. (UPS) Balance Sheet ($ mn) _______________________________________ BUY Rating since Jul 10, 2019 12/25 12/26E 12/27E 12/28E Cash & cash equivalents 5,887.0 5,509.1 6,879.3 8,843.0 Accounts receivable 11,209.0 11,805.6 12,449.6 13,124.5 Inventory -- -- -- -- Ratios & Valuation __________________________________________ Other current assets 1,949.0 2,379.1 2,399.8 2,529.9 12/25 12/26E 12/27E 12/28E Total current assets 19,045.0 19,693.8 21,728.7 24,497.5 P/E…