These initiatives cut thousands of roles from the shipping giant. And the cuts helped UPS post a huge earnings-per-share ("EPS") beat for the third quarter of 2025.
But those roles didn't all disappear. UPS shifted work to AI agents.
Of course, UPS was in desperate need of a turnaround. As I discussed last month, its stock has struggled heavily in recent years.
So it makes sense that UPS would embrace new technology – and the cost savings that come with it.
Naturally, the company's weary investors loved the change...
Shares of UPS started surging in the wake of that third-quarter earnings report. They closed yesterday at $118.70. That's about 45% higher than the stock's 52-week low of $82 per share.
The Power Gauge has also changed its tune on UPS...
As I noted last month, the strong earnings report in October helped flip UPS from a "bearish" rating into "neutral" territory.
Today, the stock earns a "bullish" rating. The Power Gauge last saw UPS as "bullish" in mid-2023.
But recent developments with UPS could spell trouble for the company's turnaround before it has a chance to run...
The man who predicted the 2023 bank run has a new warning. "AI will soon rupture into two sectors," he says. It could either cost you ALL your gains since 2022... or potentially double your money if you understand what's coming to AI stocks this month and why. Click here to learn more.
Years ago, Whitney Tilson contacted the FBI with a financial tip about Jeffrey Epstein after hearing something that felt wrong. He has followed that instinct through every major market dislocation of his career. Now he believes America is approaching another fundamental break... and he's explaining why. See his warning here.
UPS Cost Cutting May Have Gone Too Far
The Teamsters Union recently announced a lawsuit against UPS for an alleged illegal buyout plan.
According to the union, UPS is offering members a lump-sum payment to leave their jobs and never return.
The union also claims this is the second time in six months that UPS tried to get around its contract with the Teamsters.
Now, I can't comment on the legal merits of this case. But if the accusations are true, it adds to the narrative that UPS is making cuts anywhere it can – possibly in illegal ways.
You see, that isn't the only lawsuit UPS is facing...
A lawsuit filed last December accuses UPS of stealing wages from its seasonal workers in New York state. It accuses UPS of failing to record all the hours its seasonal employees worked.
It also says UPS required off-the-clock labor and even manipulated employee timecards.
Meanwhile, you might recall the horrific cargo-plane crash in Louisville, Kentucky, late last year...
On November 4, UPS Flight 2976 crashed while attempting to take off. The tragedy killed 15 people – including the three crew members on board.
Investigators traced the cause of the crash to fatigue cracks in the left pylon. This component connects the plane's engine to the wing.
U.S. safety investigators said the 34-year-old plane went in for maintenance just weeks before the crash. They're asking UPS why it missed these cracks during regular maintenance.
To be clear, I'm not saying that UPS is guilty before we know all the facts with these cases.
But we know UPS's turnaround strategy aims to increase efficiency and save money.
And this strategy could backfire if it turns out the company's cost-cutting measures were illegal – or even led to the fatal crash in Kentucky.
Amid all this, I also noticed a weaker point that the Power Gauge has picked up on with UPS...
A Warning Sign From the Power Gauge on UPS's Earnings Quality
I'm talking about a special feature for our system – the earnings quality ("EQ") filter. My colleague Joe Austin helped develop it...
Put simply, the EQ filter is designed to cut through "financial engineering" and find companies that consistently produce pure cash. It's a way to look deeper into a company's earnings – and to help give a better picture of the underlying business' performance.
The filter also produces a ranking. These range from "very low" to "very high."
Right now, the Power Gauge says UPS's EQ is "low." It flags the company for converting little of its earnings into cash.
Meanwhile, the Power Gauge also picks up on some other weaker spots "under the hood" with UPS...
As I said earlier, it gives the stock a "bullish" overall rating. But when we dig deeper, UPS gets negative grades for the Earnings and Technicals categories. And the Financials category is "neutral." Out of the four main categories, Experts is the only one with a positive rating right now.
Putting it all together...
UPS's stock has shown some strength recently. And the company is working hard on righting the ship after years of stock struggles.
I'm clearly not saying UPS is doomed. But it may be going too far with some of its cost-cutting attempts. When it comes to the recent cases, major developments – like a settlement or a verdict – could send UPS's stock spiraling back down again.
With the help of the Power Gauge, I'll be on the lookout for stronger opportunities.
Good investing,
Ethan Goldman Editor's note: In today's innovation-driven, hype-fueled environment, it's crucial to navigate a market full of "trapdoor" stocks that can collapse without warning...
That's where the Power Gauge – with features like the EQ filter – comes in. And during a special event next Tuesday, February 17, our founder Marc Chaikin is going on camera to discuss how he's using these powerful tools for something big...
In short, it's related to a rupture that could be fast approaching AI stocks... and how you could double your money on the stocks that will be spared as it all unfolds.
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Real Estate
+4.97%
Materials
+4.36%
Energy
+3.7%
Industrials
+2.94%
Utilities
+2.22%
Consumer Staples
+1.49%
Health Care
+0.8%
Information Technology
+0.33%
Financial
+0.04%
Communication
-0.14%
Consumer Discretionary
-2.2%
* * * *
Industry Focus
Semiconductor Services
22
17
4
Over the past 6 months, the Semiconductor subsector (XSD) has outperformed the S&P 500 by +25.08%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #7 of 21 subsectors and has moved up 2 slots over the past week.
Top Stocks
DIOD
Diodes Incorporated
MU
Micron Technology, I
CRUS
Cirrus Logic, Inc.
* * * *
Top Movers
Gainers
DDOG
+13.74%
MAS
+8.67%
MAR
+8.5%
HAS
+7.48%
DGX
+7.37%
Losers
BDX
-17.22%
SPGI
-9.71%
RJF
-8.75%
INCY
-8.24%
WDC
-8.19%
* * * *
Earnings Report
Earnings Surprises
SPOT Spotify Technology S.A.
Q4
$5.20
Beat by $1.86
F Ford Motor Company
Q4
$0.13
Missed by $-0.06
CVS CVS Health Corporation
Q4
$1.09
Beat by $0.09
HOOD Robinhood Markets, Inc.
Q4
$0.73
Beat by $0.05
DDOG Datadog, Inc.
Q4
$0.59
Beat by $0.04
* * * *
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