UPS tells investors its plans for the next three years
United Parcel Service (UPS) is holding its investor day on Tuesday. The shipping giant unveiled its financial targets for 2026, which include consolidated revenue of $108 billion to $114 billion and a "consolidated adjusted operating margin above 13%."
Yahoo Finance's Seana Smith and Brad Smith break down the announcement in the video above.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Stephanie Mikulich.
Video Transcript
SEANA SMITH: First up, UPS. Shares this morning moving to the upside, up just about 2/10 of a percent. Setting fresh financial goals here for 2026. They now expect $108 billion to $114 billion in adjusted revenue.
And also, saying that they expect adjusted operating margins of more than 13%. So a bit of an improvement here for UPS. We know the company along with many of its competitors struggling with a slowdown in package volume. That has been the case almost across the board, when you compare it to the levels that we saw.
Obviously, when we were in the midst of the pandemic when everyone, nearly everybody was shopping from home, the e-commerce plays were very strong. So UPS has pivoted their business a little bit under their CEO. She's had this focus on better, not bigger, more focused on the profitable, or what she says is more profitable parts of their business.
And, at least, at this point, taking into consideration, Brad, the guidance. It looks like that turnaround plan or that plan here for recovery is starting to pay off.
BRAD SMITH: Yeah. A few of the segments that I just want to briefly take a look at here, because that is where they're pointing towards. And you mentioned the operational efficiencies. That's going to place a lot of investor attention towards the margins that they've set forth in these goals here.
US domestic package segment, adjusted operating margin, the target there, at least, 12%. The international package segment, that adjusted operating margin, that goal is between 18% to 19%. And then supply chain solutions, that operating margin they're targeting around 12%.
So all of this considered, it's going to really need to come in with free cash flow of somewhere between $17 to $18 billion. We'll see if they're able to deliver upon that. That call, though, or that webcast began at 9:15 AM this morning Eastern time.
So we'll see what more continues to come from UPS.
SEANA SMITH: Yeah, exactly. And it's also important to point out, they're up against stiffer competition. They also reached that recent deal here with the labor unions that has added to some of their costs here. They've also been forced to be a bit more competitive on pricing, as they do now compete with USPS, obviously, along with FedEx, and some of those other larger players out there.
So, again, UPS seeing a bit of an improvement and expect further improvement, if you take a look at some of those key critical levels there.
BRAD SMITH: Yeah. And looking more towards the premium market here is what they added on to that statement out there too.
