Best Logistics Stocks 2026: FedEx vs. UPS – Which Delivery Stock is Stronger Fundamentally?
- Sanzhi Kobzhan
- 10 minutes ago
- 19 min read
Investors often compare FedEx (FDX) and United Parcel Service (UPS) – the two global delivery giants – when searching for the best logistics stocks in 2026. Both companies dominate the package transportation industry, offering domestic and international shipping, freight services, and logistics solutions.
In this analysis, we will break down the key fundamentals of FedEx and UPS, compare their financial health side-by-side, and determine which stock is stronger fundamentally – and ultimately, which stock might be the better buy now.
(All fundamental data in this article was extracted using the Stocks2Buy app)
Company Overview: FedEx vs. UPS
FedEx Corporation (FDX) – Industrials / Integrated Freight & Logistics: FedEx is a global transportation and business services provider, known for its express air delivery and time-sensitive shipping expertise. Through its various segments (FedEx Express, FedEx Ground, FedEx Freight, etc.), FedEx offers overnight courier services, ground package delivery, less-than-truckload (LTL) freight, and supply chain solutions in over 220 countries.
FedEx was founded in 1971 in Memphis, Tennessee, and has grown into a $73.4 billion market cap company at a stock price around $310. With a trailing P/E ratio of 17.2, FedEx’s valuation appears modest relative to earnings. The company has been focusing on efficiency and cost-cutting (through programs like “DRIVE”) to counter a recent softness in package volumes. FedEx also rewarded shareholders with $3 billion in share buybacks and increased dividends in its latest fiscal year.
United Parcel Service, Inc. (UPS) – Industrials / Integrated Freight & Logistics: UPS is one of the world’s oldest and largest package delivery companies (founded in 1907, HQ in Atlanta). UPS operates a vast fleet (over 121,000 delivery vehicles and dozens of aircraft) to provide time-definite ground and air delivery services domestically in the U.S. and internationally in Europe, Asia, and beyond. UPS’s business is organized into U.S. Domestic Package and International Package segments, along with a Supply Chain Solutions division for freight forwarding and logistics.
With a market cap of about $92.9 billion and a stock price near $109, UPS trades at a P/E of 16.9 – very close to FedEx’s valuation. Under CEO Carol Tomé, UPS has pursued a “better not bigger” strategy, focusing on high-margin deliveries (like healthcare and small business packages) and trimming less profitable volume (notably scaling back Amazon shipments). This strategic pivot aims to improve profitability long-term, though UPS has faced near-term headwinds from labor cost increases and volume declines.
Industry Position
Both FedEx and UPS are integral to global e-commerce and supply chains, essentially forming a duopoly in express package delivery (alongside DHL internationally). They compete intensely on speed, network reach, and service quality.
FedEx is often lauded for its overnight air delivery prowess and broad international express network.
UPS is renowned for its efficient ground delivery network and high package density (especially in U.S. cities), which gives it cost advantages in ground shipping.
In recent years, FedEx stock has outpaced UPS stock in performance, reflecting FedEx’s aggressive cost cuts and operational improvements. For example, as of mid-fiscal 2025, FedEx shares had declined only ~15% year-to-date vs. UPS’s ~19% decline in the same period.
Over a multi-year span, FedEx’s stock price gains have been stronger than UPS’s. However, stock performance alone doesn’t tell the full story – we need to compare fundamentals to see which business is truly stronger under the hood.
Recent Financial Performance and Earnings Trends
Revenue and Earnings Growth
Both companies have seen slowing growth recently amid a post-pandemic pullback in shipping demand and higher costs. FedEx’s fiscal year 2025 (ended May 2025) saw revenue grow a mere +0.3% year-over-year, essentially flat. UPS’s fiscal year 2024 (ended Dec 2024) revenue similarly inched up only +0.2% from the prior year – indicating a stagnation in top-line growth for both. This flat revenue environment is due to weaker package volumes (as COVID-era e-commerce frenzy cools off and global economic growth moderates) and deliberate moves like UPS reducing low-margin shipments.
However, the bottom-line tells a different story for each:
FedEx managed to hold profits relatively steady – its net income fell -5.5% in FY2025, and earnings per share (EPS) dipped -2.8%. Gross profit was roughly flat (-0.2% decline), suggesting FedEx maintained margins despite the tough environment.
UPS experienced a sharper profit decline – FY2024 net income dropped -13.8%, and EPS fell -13.4% year-over-year. Gross profit declined -3.7%, and operating income tumbled -7.3%.
In other words, FedEx’s earnings proved more resilient, while UPS’s profitability took a harder hit recently. UPS faced higher labor expenses (due to a new Teamsters union contract that raised driver wages) and some customer attrition from its strategic pullback on Amazon volume. FedEx, on the other hand, aggressively cut expenses (e.g., parking planes, combining divisions, and layoffs) to protect its margins.
Quarterly Earnings Surprises
Both companies have a track record of beating analyst expectations in recent quarters, though FedEx’s beats have been more dramatic:
FedEx: The company beat earnings estimates for at least the last three quarters reported. For instance, in the quarter reported Dec 2025, FedEx delivered EPS of $4.82 (crushing the $4.12 estimate) on revenue of $23.47B (above the $22.78B estimate). Similar beats occurred in Sep 2025 (EPS $3.83 vs $3.60 est.) and June 2025 (EPS $6.07 vs $5.82 est.). These positive surprises highlight FedEx’s ability to outperform expectations, likely thanks to cost efficiencies and pricing improvements in its Express and Ground units.
UPS: UPS also beat estimates lately, but had one mixed quarter. In Oct 2025, UPS reported EPS of $1.74, well above the $1.29 estimate, on revenue of $21.41B (vs $20.84B est.). Earlier, in Jul 2025, UPS’s EPS of $1.55 was essentially in line with consensus ($1.56 est.), and in Apr 2025, it beat with $1.49 vs $1.38 est. While UPS is still surpassing revenue forecasts, the more modest EPS beats (and one quarter just meeting expectations) reflect the profit pressures it has faced.
Looking ahead, FedEx’s next earnings (expected March 2026) has an EPS consensus of around $4.06, whereas UPS’s next report (due late January 2026) has an EPS estimate of $2.23 on revenue of $24.0B. These upcoming results are being watched as near-term catalysts that could influence the stocks. Investors will be keen to see if UPS’s cost-cutting (like driver buyouts and facility closures) can improve its margins, and whether FedEx can continue its earnings growth trajectory into 2026.
Analyst Sentiment and Price Targets
Wall Street’s price targets underscore an interesting divergence:
FedEx (FDX): Among roughly 125 analysts, the 12-month target price ranges from a low of $130 to a high of $355, with an average target of $275.48. At the current ~$310 share price, FedEx is trading above the analyst average target – implying that many analysts think the stock is ahead of its fundamentals. In fact, $310 is closer to the high end of the target range. This could signal that FedEx’s recent rally might have outrun consensus expectations, or that analysts might need to raise their targets if they remain bullish. The cluster of targets around ~$275 suggests some caution on FedEx’s valuation at these elevated levels.
UPS (UPS): Among ~93 analysts, the 12-month targets span from a low of $45 (quite bearish) to a high of $275, with an average target of $163.17. With UPS stock around $109, it is well below the average target – roughly 50% upside to the consensus price. This indicates that analysts see significant recovery potential for UPS from its beaten-down levels. Even the lowest target ($45) is an outlier; the majority are far above the current price. The wide range also reflects uncertainty – some analysts worry about UPS’s challenges, while others clearly view it as undervalued.
Overall, market sentiment via targets favors UPS’s future stock appreciation more than FedEx’s at the moment.
Valuation: Is One Stock Undervalued?
From a valuation perspective, both FedEx and UPS trade at relatively moderate multiples, especially compared to the broader Industrials sector:
Price-to-Earnings (P/E) Ratio (TTM)
FedEx’s trailing P/E is 17.2, and UPS’s is 16.9 – virtually identical. Both are markedly below the Industrials sector average P/E of ~42.8. This stark difference suggests that parcel delivery stocks are valued much lower than many other industrial companies (perhaps due to their slower growth prospects or recent profit declines). A P/E in the high teens is in line with the overall market average and indicates neither stock is exorbitantly priced relative to current earnings. In fact, their below-sector P/E could hint at potential undervaluation (or simply that the market has lower growth expectations for delivery companies than for other industrials). In short, both FDX and UPS look cheap vs. peers on P/E – a positive sign for value-oriented investors.
Forward P/E and Relative Value
Looking at forward earnings (next 12 months), FedEx has a slight edge. As of mid-2025, UPS traded around 13.7× forward earnings, slightly higher than FedEx’s 12.8× forward earnings. In other words, FedEx was a bit cheaper than UPS on a forward P/E basis, and indeed FedEx earned a Value Score of “A” vs. UPS’s “B” from Zacks. This aligns with FedEx’s stronger cost execution and earnings growth prospects, which make it look undervalued on future earnings. However, these figures may have evolved by 2026 given stock price moves – with UPS’s price dropping, its forward P/E may now be more attractive.
PEG Ratio (Price/Earnings to Growth)
The PEG ratio provides insight into valuation adjusted for earnings growth. FedEx’s PEG (TTM) is 3.50, which is relatively high – indicating its stock price is high relative to its recent earnings growth rate. UPS’s PEG is listed as -4.54 (negative, due to negative earnings growth in the TTM period). A PEG above 1 usually means a stock isn’t cheap relative to its growth, and FedEx at 3.5 suggests its modest growth has not kept up with the share price increase. UPS’s negative PEG isn’t interpretable in the usual way (it reflects that earnings declined, so growth was negative). If we consider forward-looking growth: analysts project UPS’s earnings to grow ~7.4% annually over the next 5 years, versus ~10.4% for FedEx. By that measure, FedEx has the superior growth outlook. Neither stock is a classic “PEG < 1” bargain, but FedEx is expected to deliver faster earnings growth, partly justifying a higher valuation.
Discounted Cash Flow (DCF) Fair Value
To gauge intrinsic value, let’s consider the DCF fair value estimates provided by Stocks2Buy’s model. FedEx has a DCF fair value of about $135.42 per share, whereas UPS’s DCF fair value is around $128.94 per share. Comparing these to market prices:
FedEx at ~$310 is dramatically above its DCF-based fair value – roughly +56% overvalued relative to the model. This implies the stock price has far outpaced what the underlying cash flows (discounted to present) might justify. FedEx’s recent surge (shares have jumped ~75% from their lows in mid-2023) means investors are paying a premium, perhaps pricing in optimistic future gains from efficiency moves.
UPS at ~$109 is below its DCF fair value of $128.94 – about 18% undervalued by that measure. This suggests UPS is trading at a discount to its intrinsic cash flow value, possibly due to the market’s pessimism around its recent struggles. In other words, UPS stock looks like a value opportunity if one believes the DCF assumptions and that UPS will return to cash flow growth.
These DCF indications highlight a clear contrast: FedEx appears overvalued, while UPS appears undervalued relative to fundamental cash flow value. Investors should note that DCF models are sensitive to growth and margin assumptions, but this does raise caution that FedEx’s stock may be overpriced at current levels, whereas UPS might be a bargain if it can execute a turnaround.
Enterprise Value to Free Cash Flow (EV/FCF)
Another lens on valuation is how the market prices each company’s free cash flow. FedEx’s EV/FCF is about 24.05×, and UPS’s is about 26.24× (TTM). A lower multiple means a cheaper valuation relative to cash generation. Here, FedEx has a slight edge, being valued at ~24 times FCF versus UPS’s 26×. This ties in with FedEx’s higher free cash flow yield (discussed below). Neither multiple is extremely low – around 25× FCF is moderate – but FedEx looks a bit better by this metric.
In summary, FedEx currently has richer share-price metrics (and possibly stretched valuation) after its stock price run-up, whereas UPS’s stock looks relatively cheaper and imbued with more expectation for recovery (analyst targets and DCF suggest upside). Next, we examine how their operational efficiencies and profitability compare, to see which company has the stronger fundamentals backing these valuations.
Profitability and Efficiency: Margins & Returns on Capital
A fundamentally strong business will show robust profit margins and efficient use of capital. Let’s compare FedEx and UPS on key profitability metrics:
Gross Profit Margin (TTM)
FedEx’s gross margin is 23.2%, compared to UPS’s 18.1%. FedEx clearly enjoys a higher gross margin, meaning it retains more profit from each dollar of revenue after covering direct costs (like fuel, labor, transport costs). This could be due to FedEx’s pricing power in express services or better cost control in operations. UPS’s business, especially its domestic ground segment, traditionally runs on lower margins but higher volume; additionally, UPS’s labor costs rose recently, squeezing margins. FedEx’s 5 percentage point advantage in gross margin indicates it currently operates at a more profitable rate on core services.
Operating Margin
We know FedEx had a slight decline in operating income (-4.3% FY25) while UPS’s operating income fell more (-7.3% FY24). This hints that FedEx likely maintained or slightly improved its operating margin, whereas UPS’s margin contracted. Indeed, UPS faced margin pressure in its international segment (operating margin there shrank to ~14.8% in Q3 2025). Profitability at the operating level thus tilts in FedEx’s favor recently.
Return on Assets (ROA)
UPS has 7.7% ROA, versus FedEx’s 4.9% ROA. This means for each dollar of assets, UPS generates 7.7 cents of profit annually, while FedEx generates 4.9 cents. UPS’s higher ROA indicates a more efficient use of its asset base – possibly reflecting UPS’s asset-light moves (outsourcing some logistics) or simply better integration of its network. FedEx’s ROA is lower, suggesting it carries more assets (planes, hubs, trucks) relative to current earnings. Generally, UPS is squeezing more income from its assets, a positive sign of efficiency.
Return on Equity (ROE)
UPS’s ROE is a hefty 34.4%, far above FedEx’s 15.7%. This is a striking difference – UPS is delivering over one-third return on shareholder equity, indicating very effective generation of profit relative to shareholders’ capital. Part of this is due to UPS’s financial leverage (debt can boost ROE) and possibly share buybacks reducing equity. FedEx’s 15.7% ROE is solid, but not extraordinary. The much higher ROE for UPS suggests it has been very shareholder-friendly in terms of capital use, but it could also be a red flag if driven by debt (we’ll examine debt later). Still, in pure fundamental terms, UPS has demonstrated superior ROE, pointing to strong profitability for owners.
Return on Invested Capital (ROIC)
UPS also leads here, with 11.3% ROIC vs. FedEx’s 6.0% ROIC. ROIC measures how well a company generates returns on all capital (debt + equity) invested in the business. UPS’s 11.3% indicates it’s earning a healthy return above typical cost of capital estimates (often ~8-10%), while FedEx’s 6.0% is likely at or below its cost of capital – meaning FedEx may not be creating substantial economic value at the moment. UPS’s higher ROIC underscores that its strategic focus on profitable segments is paying off in terms of overall capital efficiency. FedEx’s lower ROIC might reflect heavy investments or still-unrealized efficiency gains from its restructuring.
Together, these metrics paint a picture that UPS is fundamentally more efficient at generating profit from its resources – higher ROA, ROE, and ROIC are strong positives for UPS’s fundamental quality. FedEx, meanwhile, has better margins at the gross level, but that hasn’t translated into better returns on capital yet. It suggests FedEx may have room to improve its asset utilization or benefit more from its cost-saving initiatives down the line.
Cash Flow and Shareholder Returns
Cash flow is the lifeblood of a company, and it also supports shareholder returns like dividends and buybacks. Let’s compare:
Operating Cash Flow to Sales (OCF/Sales)
This ratio shows how much of each dollar of revenue is converted into operating cash flow (a measure of cash earnings). FedEx’s OCF/Sales is 9.1%, while UPS’s is 9.5%. These are very close – around $0.09 of every $1 revenue becomes cash flow for both. UPS has a slight edge, converting marginally more of its sales into cash. This indicates comparable cash-generation efficiency in their operations. A roughly 9–10% OCF margin is decent for companies with thin margins businesses; it means they do manage working capital and expenses well to get solid cash out of their revenues.
Free Cash Flow (FCF) Yield
FedEx’s free cash flow yield is 5.9%, versus UPS’s 4.7% (both on TTM basis). FCF yield is essentially FCF per share divided by share price, indicating the cash return an investor “buys” at the current price. FedEx’s higher FCF yield means an investor at $310/share gets about 5.9% of that back in free cash annually (either via dividends, buybacks or reinvestment by the company), whereas UPS at $109 yields ~4.7% in cash. In other words, FedEx’s stock price is supported by a slightly stronger cash flow generation relative to price. This corroborates FedEx’s lower EV/FCF multiple – the market is paying a bit less for each dollar of FedEx’s FCF compared to UPS’s.
Dividend Yield and Policy
This is a critical area of difference. UPS is a renowned dividend payer, while FedEx historically had a smaller dividend but has been growing it:
UPS currently yields approximately 6% – 6.5%, a very high dividend yield for a large-cap industrial stock. The sharp stock drop over the past year pushed UPS’s yield to one of the top 10 in the S&P 500. UPS pays a quarterly dividend of $1.64 per share (raised slightly in 2024), amounting to $6.56 annually. The company has a long track record of dividend growth (though the latest raise was a token +0.6%). However, such a high yield comes with questions about sustainability: UPS’s payout ratio soared to ~84% of net income, and with profits down, UPS even hinted it might need to increase debt to fund the dividend in the near term. This is a red flag – an 84% payout leaves little room for error or reinvestment, and indeed free cash flow barely covered dividends recently. Still, for now UPS is committed to maintaining its dividend, making it attractive to income investors.
FedEx has a much lower dividend yield of around 1.6% – 1.8% at its current price. FedEx pays a quarterly dividend (recently $1.26 per share, ~$5.04 annual). Notably, FedEx increased its dividend per share by 8.5% in FY2025, signaling confidence and a shareholder-friendly approach. The payout ratio for FedEx is modest (FedEx’s dividend is well-covered by earnings and FCF), so it’s very safe – but the yield is comparatively low. FedEx has preferred to return cash via share buybacks: in fiscal 2025 it repurchased $3 billion of stock and, combined with dividends, returned $4.3 billion to shareholders. These buybacks have helped boost its ROE and signal management’s optimism.
In summary, UPS offers a high dividend income but with some risk attached, whereas FedEx offers lower immediate yield but strong buyback activity and dividend growth. Depending on an investor’s style, UPS might appeal for income (if one believes the dividend will hold and eventually grow), while FedEx appeals for its total shareholder return (price appreciation plus some dividend, given its aggressive buybacks and earnings growth focus).
Balance Sheet and Debt Considerations
Financial strength is a fundamental factor as well. A quick look at debt and risk:
Debt Levels
FedEx’s total debt slightly decreased by about -0.8% in FY2025, showing it is not adding leverage and is likely managing debt prudently. UPS’s debt fell -4.0% in FY2024, also reducing leverage somewhat. However, the debt-to-capital ratio favors FedEx. UPS has a long-term debt-to-capitalization of roughly 55.4%, which is higher than the industry’s ~49% and much higher than FedEx’s ~40.5%. This indicates UPS is more leveraged – not dangerously so, but it relies more on debt financing than FedEx does. FedEx’s lower debt ratio gives it more balance sheet flexibility and likely lower interest burden relative to capital.
Cash and Flexibility
Both companies generate strong cash flow, but UPS’s high dividend payout means less cash is retained. FedEx’s approach of moderate dividend + buybacks gives it flexibility to throttle back buybacks if needed to preserve cash, whereas UPS’s big dividend is a more fixed obligation. In a scenario of prolonged downturn, FedEx might have more resilience due to its lower dividend commitment and lower debt load.
Risk Factors
Both face industry risks like economic downturns reducing shipment volumes, and competitive pressures (including each other and regional players). A unique UPS risk was labor relations – a potential UPS worker strike loomed in mid-2023, but was averted with a new contract (albeit at the cost of higher labor expense).
FedEx’s risk comes from executing its large restructuring (integrating Ground and Express networks by mid-2024, and optimizing operations) – failure there could waste investments. From a fundamental risk perspective, UPS’s higher leverage and obligated dividends make it slightly more vulnerable if business conditions deteriorate, whereas FedEx has taken a somewhat leaner approach.
In terms of fundamental strength, FedEx appears to have a stronger balance sheet and less financial risk (lower debt ratio), while UPS’s balance sheet is more extended due to its capital returns and debt usage.
Head-to-Head Comparison Table
To summarize the key fundamental metrics side by side, below is a comparison of FedEx and UPS:
Metric | FedEx (FDX) | UPS (UPS) |
Market Cap (Jan 2026) | ~$73.4 Billion | ~$92.9 Billion |
Recent Stock Price | ~$310.89 | ~$109.50 |
P/E Ratio (TTM) | 17.2 | 16.9 |
Sector Avg P/E (Industrials) | ~42.8 | ~42.8 |
Analyst 12-mo Target (Avg) | $275.48 (below current) | $163.17 (above current) |
Analyst Sentiment | Hold/Neutral (mixed) | Buy potential (consensus upside) |
Revenue Growth (last FY) | +0.3% (FY2025) | +0.2% (FY2024) |
EPS Growth (last FY) | -2.8% (FY2025) | -13.4% (FY2024) |
Gross Profit Margin | 23.2% | 18.1% |
Return on Assets (ROA) | 4.9% | 7.7% |
Return on Equity (ROE) | 15.7% | 34.4% |
Return on Invested Capital | 6.0% | 11.3% |
Free Cash Flow Yield | 5.9% | 4.7% |
EV / FCF | 24.0× | 26.2× |
Operating Cash Flow/Sales | 9.1% | 9.5% |
Dividend Yield | ~1.7% | ~6.0% |
Dividend Growth (last FY) | +8.5% | +1.0% |
Payout Ratio | Low (~30-40% of EPS) | High (~84% of EPS) |
DCF Fair Value (Stocks2Buy) | ~$135.42 | ~$128.94 |
Current vs DCF | ~56% above (overvalued) | ~17-18% below (undervalued) |
Debt-to-Capital | ~40% | ~55% |
Recent News Themes | Cost cuts, Buybacks, Record earnings beats | Cost cuts, Labor issues, High dividend yield |
Table: Fundamental comparison of FedEx and UPS. We see FedEx leading in margins and recent earnings consistency, whereas UPS leads in efficiency ratios (ROA/ROE) and offers a higher dividend. Valuation indicators show FedEx’s stock is relatively more expensive and UPS more of a value play.
Outlook and Catalysts
Industry Outlook 2026
The freight and courier industry is expected to improve moderately as global economic conditions stabilize. Both FedEx and UPS have identified e-commerce growth, healthcare logistics, and small-business shipping as key drivers. Additionally, both companies are using automation and technology to drive efficiency (UPS in drones and warehouse robotics; FedEx in route optimization and network integration). These investments could bolster margins longer term.
FedEx Specific: FedEx’s major DRIVE program (aiming for $4 billion+ in cost reductions) is ongoing, and by spring 2024 FedEx began consolidating its Ground and Express delivery networks into one unified operation for U.S. deliveries – a historic restructuring that can yield significant savings and improved asset utilization. If executed well, this could improve FedEx’s profit margins further in 2026 and beyond. FedEx also re-entered a partnership with Amazon for deliveries (after having cut it off in 2019), selectively filling volume that UPS stepped back from. This may boost FedEx’s revenues, though FedEx must ensure it’s at acceptable margins. Analysts forecast FedEx’s fiscal 2026 revenue to rise about +1.6% and EPS to grow about +1.3%, with an acceleration to higher growth by 2027. FedEx’s five-year earnings growth is pegged around 10% annually, indicating optimism in its long-term trajectory. Risks include any global recession or trade slowdown that cuts shipping demand, but FedEx has shown agility in adjusting capacity.
UPS Specific: UPS in 2025 faced a significant challenge with its union labor negotiation. The new contract secures labor peace for a few years but raises costs; UPS is responding by offering buyouts to higher-paid drivers and planning to trim about 20,000 jobs (4% of workforce) and close some facilities to cut expenses. UPS’s strategy to deliberately reduce volumes from its largest customer Amazon by 50% (by mid-2026) is bold – it forgoes low-margin revenue to focus on more profitable segments. If successful, UPS could see margin expansion by replacing that volume with higher-yielding shipments (SMB customers, etc.). However, in the near term it means revenue could shrink before it grows again. Indeed, consensus for UPS expects -4% sales decline in 2025 and a modest +0.6% rebound in 2026, with a big EPS jump of +13% in 2026 as cost cuts kick in. UPS’s five-year earnings growth projection is lower (~7% annually) than FedEx’s. A key strength for UPS is its deep penetration in U.S. businesses and its trusted brand, which give it pricing power especially in B2B deliveries. The upcoming earnings (Q4 2025 report) and management’s 2026 guidance will be critical for shaping market sentiment on whether UPS’s turnaround is on track.
Market Sentiment
It’s worth noting current market views: Zacks Investment Research as of mid-2025 favored FedEx, rating FDX a Hold vs UPS a Sell and citing FedEx’s better valuation and growth prospects. However, more recent analyses (e.g., Motley Fool, Jan 2026) argue that UPS is the better long-term play at today’s prices, despite FedEx’s past stock outperformance. Indeed, one article noted that FedEx stock had already outpaced UPS in recent years, but UPS’s future strategy and lower price could make it a more attractive buy now. The high dividend yield and undervaluation of UPS have caught the attention of value investors. FedEx, conversely, has been lauded for delivering on efficiency promises – investors rewarded it by driving the stock up, but that also means expectations are high.
Which Stock is Fundamentally Stronger – and Which One to Buy?
Both FedEx and UPS are quality blue-chip logistics companies, but our comparison reveals some important differences:
FedEx demonstrates stronger recent fundamentals in terms of profit margins and growth momentum. It navigated the challenging 2024–2025 period with minimal dents to revenue and earnings, impressively beating forecasts and maintaining solid margins. FedEx’s initiatives (cost cuts, network integration, share buybacks) have boosted its efficiency and investor confidence. It also has a sound balance sheet (lower debt) and more headroom to invest or return cash as needed. In terms of operational performance and growth outlook, FedEx appears fundamentally robust and poised for steady improvement.
UPS, on the other hand, boasts strong efficiency metrics (higher ROE, ROIC) and a dominant position in U.S. ground shipping. Despite a tough year that saw profits dip, UPS remains a cash-generating machine and has proven it can adapt (by reshaping its business mix toward higher-margin services). UPS’s fundamental appeal is further enhanced by its hefty dividend and significantly undervalued stock price. The market’s pessimism has arguably gone too far – with UPS trading well below fair value estimates and historical multiples, there is substantial upside if UPS executes its strategy and regains earnings growth.
When asking “which stock is stronger fundamentally,” the answer can depend on the aspect considered.
FedEx has the edge in recent performance and perhaps management execution, whereas
UPS shines in capital returns and efficiency ratios.
Both have underperformed their potential lately due to industry headwinds, but neither is fundamentally weak – they are more different than one might assume for two companies in the same industry.
Best Logistics Stocks: Which stock to buy now?
Based on the comprehensive analysis, UPS (UPS) emerges as the more compelling buy at current levels. Here’s why:
UPS’s stock is attractively valued (trading about 17% below DCF fair value and with 50%+ upside to consensus target), providing a margin of safety. FedEx’s stock, in contrast, has run ahead of its valuation (50%+ above DCF value), suggesting limited upside unless growth surprises further.
UPS offers a very high 6% dividend yield, paying investors generously to wait for a turnaround – a boon in any portfolio, as long as the dividend is maintained. FedEx’s low yield and higher price means less immediate return unless the stock keeps climbing.
While UPS’s recent financials dipped, the company is taking decisive steps to improve profitability (cost cuts, pricing strategy) and those should bear fruit by late 2026. The earnings rebound expected for UPS next year is stronger (double-digit EPS growth) versus very modest growth for FedEx.
FedEx, despite its strong execution, is priced for perfection right now. Any slip in FedEx’s growth or cost-saving plan could pressure its stock. UPS has more of the bad news baked in already, and thus more upside optionality if things go even slightly better than the market fears.
To be sure, FedEx is a fundamentally solid company and not a bad investment by any means – its lower leverage and consistent performance make it a stalwart in logistics. Investors focused on growth and total return might still prefer FedEx, especially if one believes FedEx will continue outperforming and perhaps warrant its premium valuation.
If FedEx’s integration plan yields higher margins and it accelerates growth (beyond what’s currently expected), its stock could justify further gains. However, weighing all factors today, UPS’s stronger efficiency metrics and discounted stock price tilt the scales in its favor. The market appears to have penalized UPS for short-term issues, creating an opportunity to accumulate a high-quality franchise at a cheap price.
FedEx, conversely, has been rewarded for its improvements – perhaps too generously – making its stock a bit expensive to initiate a position right now.
Final Verdict: UPS is fundamentally robust and offers better value at today’s price, making it the stock to consider buying between the two. FedEx may be the slightly stronger operator at this moment, but UPS’s combination of efficiency, dividend income, and undervaluation positions it as the potentially stronger total-return play for 2026. Investors looking at the best logistics stock for 2026 might find that UPS delivers more bang for the buck in the long run.