UPS Stock Insider Buys: 5 Key Reasons to Watch

United Parcel Service Inc. (UPS) is a delivery service provider offering supply chain management solutions. They provide transportation and delivery, distribution, ocean freight, air freight, customs brokerage, contract logistics and more.

UPS has a market value of $111.7 billion, and the company operates through two business divisions—domestic and international package operations. Founded in 1907, its reach in the U.S. and around the world is so vast that UPS is considered a proxy for broader economic activity.

Atlanta-based UPS is struggling in 2024, partly under pressure from costly labor negotiations last year. Shares are down 18.6% YTD, and UPS has lost more than 30% over the past 52 weeks.

UPS shares fell to a new multi-year low of $124.80 in late July after disappointing results. But the sharp sell-off drew at least one high-profile buyer into the stock.

UPS delivered poor results

United Parcel Service reported second-quarter results on July 23, with revenue of $21.7 billion missing analyst estimates of $21.9 billion, even though volume improved during the quarter. The shipper attributed the revenue shortfall to lower revenue per unit, and many analysts pointed to discounters like Temu and Shein as the most likely source of volume growth for UPS.

That said, earnings also took a hit, with the company reporting earnings of $1.79 per share compared to estimates of $1.98 per share. In addition to lower revenue per item, UPS is grappling with higher expenses due to a new labor agreement signed last year, along with a one-time regulatory settlement.

Looking ahead, CEO Carol Tomé expects the company to return to operating profit growth in the second half of this year. Management also narrowed its full-year guidance to $93 billion, from the previous range of $92 billion to $94.5 billion, and lowered its operating margin guidance to about 9.4%.

UPS also announced plans to restart its $500 million share repurchase program “given our strong liquidity position,” with plans to increase that amount to $1 billion in the future.

5 Key Reasons to Watch This UPS Insider Buy

On July 25, UPS CEO William Johnson bought 5,000 shares of the company for $128.60 a share. While this type of insider buying is typically seen as bullish, there are five reasons to watch Johnson’s buy now:

1. This is the largest purchase of UPS stock by an insider since 2020, when Carol Tomé bought 10.1 thousand shares for $1 million shortly after joining the company as CEO.

2. This is Bill Johnson’s first recorded insider purchase since joining the UPS board in 2009. The $643,000 transaction represents almost his entire stake in UPS, which is 5,160 shares.

3. The purchase comes just two days after UPS shares fell 12% in a single session following its second-quarter results and a day after it set a new 3-year low of $124.80 during the day.

4. UPS stock appears to be a good investment at current levels, trading at a P/E ratio of 17.18x and a price-to-sales ratio of 1.21x.

5. The logistics company is generating about 5% profit annually, and UPS reiterated its strong commitment to paying a dividend during its second-quarter earnings conference call.

1. Given that the stock appears to be well worth its price, pays a generous dividend, and one knowledgeable insider bought it after a potential market overreaction, UPS could be an attractive value pick right now — especially for investors looking for passive income.

What are analysts forecasting for UPS?

Analysts are cautiously optimistic about UPS shares, with a consensus rating of “Moderate Buy” and an average price target of $145.35, indicating potential upside of 13.5% from current levels.

The company’s shares are analyzed by a total of 24 analysts, of which 12 have issued a “Strong Buy” rating, 11 “Hold”, and 1 analyst has recommended a “Strong Sell”.

As of the date of publication, Ruchi Gupta did not hold (directly or indirectly) a position in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.