United Parcel Service, Inc. (UPS) Intrinsic Value & DCF Valuation
Integrated Freight & Logistics · NYSE
Current Price
$92.28
Intrinsic Value
$95.95
+3.8% margin of safety
What Is United Parcel Service, Inc.'s Intrinsic Value?
As of 2026-10-07, the base-case DCF model estimates the intrinsic value of United Parcel Service, Inc. (UPS) at $95.95 per share, compared with a market price of $92.28, a margin of safety of +3.8%. The base case assumes 3.8% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $75.08 to $120.18. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is United Parcel Service, Inc. (UPS) Undervalued?
At $92.28, UPS trades about 3.8% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Extensive Global Delivery Network
UPS possesses a vast and integrated network of hubs, aircraft, and vehicles. This infrastructure creates significant barriers to entry for new competitors seeking to replicate its reach and efficiency.
↑Brand Recognition and Trust
UPS is a globally recognized brand synonymous with reliable package delivery. This established trust translates into customer loyalty and a preference for its services over less-known alternatives.
↑Economies of Scale in Operations
The sheer volume of packages processed by UPS allows for significant cost efficiencies. This scale advantage enables competitive pricing and superior profitability compared to smaller players.
INVESTMENT RISKS
↓Economic Sensitivity and Volume Fluctuations
UPS's business is highly sensitive to economic cycles, with declining package volumes indicating potential economic slowdowns or shifts in consumer spending. This can lead to unpredictable revenue streams.
↓Labor Relations and Costs
The logistics industry is labor-intensive. Potential labor disputes or rising wage pressures could significantly impact UPS's operating costs and service reliability.
↓Technological Disruption and E-commerce Evolution
While UPS benefits from e-commerce, evolving delivery models and new technologies could disrupt traditional logistics. Failure to adapt to changing consumer expectations or adopt new technologies poses a risk.
Base case
UPS base case valuation
Intrinsic Value
$95.95
Margin of safety
+3.8%
Expected annual return
+0.8%
Base case assumptions: 3.8% annual growth, 10.0% discount rate, 14.43x exit multiple, 5 year projection. Data as of 2026-10-07.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the UPS valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for United Parcel Service, Inc. respond.
Open DCF Calculator for UPSCompany Overview
United Parcel Service, Inc., a package delivery and logistics provider, offers transportation and delivery services. It operates through two segments, U.S. Domestic Package and International Package. The U.S. Domestic Package segment offers time-definite delivery services for express letters, documents, packages and palletized freight through air and ground services. The International Package segment provides small package operations in Europe, the Middle East and Africa, Canada and Latin America, and Asia. The company offers a range of guaranteed day- and time-definite international transportation services; day-definite services; cross-border ground package delivery; contract-only, e-commerce solutions for non-urgent, and cross-border shipments; and international service for urgent and palletized shipments. It also provides international air and ocean freight forwarding, contract logistics, customs brokerage and insurance, mail services, healthcare logistics, distribution, and post-sales services. United Parcel Service, Inc. was founded in 1907 and is headquartered in Atlanta, Georgia.
Financial Metrics — UPS Stock Valuation Data
Revenue/Share (TTM)
$105.80
FCF/Share (TTM)
$6.45
ROIC (TTM)
8.9%
ROE (TTM)
29.1%
P/FCF
14.3x
EV/EBITDA
9.7x
FCF Yield
6.93%
Debt/Equity
1.90x
Based on trailing twelve-month data, UPS shows a free cash flow per share of $6.45 and a ROIC of 8.9%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 14.3x and FCF yield of 6.93% are important context metrics when evaluating UPS's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of UPS?
United Parcel Service, Inc. currently generates $6.45 in free cash flow per share. At the current price of $92.28, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is UPS undervalued?
UPS trades at a P/FCF ratio of 14.3x with a free cash flow yield of 6.93%. A low P/FCF means investors are paying less per dollar of free cash flow; whether that is cheap depends on the company's growth, cyclicality, and capital intensity. However, whether UPS is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value UPS stock using DCF?
To perform a DCF valuation on United Parcel Service, Inc.: (1) Start with the trailing free cash flow per share ($6.45) as the base, (2) project future FCF growth over 5-10 years based on Integrated Freight & Logistics industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting UPS's risk profile — with a debt-to-equity of 1.90x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to UPS?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For United Parcel Service, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Integrated Freight & Logistics trends, then discounting those amounts to today's dollars. UPS's ROIC of 8.9% shows moderate capital returns.
How does WACC affect UPS stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For UPS, with a debt-to-equity ratio of 1.90x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 9.7x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See UPS PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Industrials valuationsDCF and P/E value UPS with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-07. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.