DCF Studio

    UPS · NYQ · Industrials

    United Parcel Service, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 124.33

    Market price

    USD 109.71

    Implied upside

    +13.3%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 4.7% of revenue against depreciation of 3.8%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 124.33+13.3%
    Exit multiple
    USD 129.19+17.8%
    Market price
    USD 109.71

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 92.6bnUSD 95.6bnUSD 98.6bnUSD 101.7bnUSD 104.7bnUSD 107.7bnUSD 110.7bnUSD 113.7bnUSD 116.6bnUSD 119.5bn+2.9%
    EBITUSD 9.6bnUSD 9.9bnUSD 10.2bnUSD 10.5bnUSD 10.8bnUSD 11.1bnUSD 11.4bnUSD 11.7bnUSD 12.0bnUSD 12.3bn+2.9%
    NOPATUSD 7.5bnUSD 7.8bnUSD 8.0bnUSD 8.3bnUSD 8.5bnUSD 8.8bnUSD 9.0bnUSD 9.3bnUSD 9.5bnUSD 9.7bn+2.9%
    Add depreciation & amortisationUSD 3.5bnUSD 3.6bnUSD 3.7bnUSD 3.8bnUSD 3.9bnUSD 4.1bnUSD 4.2bnUSD 4.3bnUSD 4.4bnUSD 4.5bn+2.9%
    Less capital expenditureUSD -4.4bnUSD -4.5bnUSD -4.7bnUSD -4.9bnUSD -5.0bnUSD -5.2bnUSD -5.4bnUSD -5.5bnUSD -5.7bnUSD -5.9bn+3.3%
    Capex, % of revenue4.7%4.7%4.8%4.8%4.8%4.8%4.8%4.9%4.9%4.9%-
    Less increase in working capitalUSD -235.0mUSD -179.8mUSD -180.3mUSD -180.4mUSD -180.2mUSD -179.7mUSD -178.8mUSD -177.5mUSD -175.9mUSD -173.9m-3.3%
    Free cashflow to firmUSD 6.4bnUSD 6.7bnUSD 6.9bnUSD 7.1bnUSD 7.3bnUSD 7.5bnUSD 7.7bnUSD 7.8bnUSD 8.0bnUSD 8.2bn+2.7%
    Discount factor0.96280.89250.82730.76680.71080.65890.61080.56620.52480.4865-
    Present valueUSD 6.2bnUSD 6.0bnUSD 5.7bnUSD 5.4bnUSD 5.2bnUSD 4.9bnUSD 4.7bnUSD 4.4bnUSD 4.2bnUSD 4.0bn-
    Present Value Of The ForecastUSD 50.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.965Reported 0.948, pulled toward 1.0 (Blume)
    Cost of equity8.98%Risk-free + beta x equity risk premium
    Cost of debt5.44%Risk-free + 55bp, the spread for a AA rating at 7.7x interest cover. Book interest / average debt was lower, at 3.7%.
    Market capitalisationUSD 93.3bn76.6% of capital
    Total debtUSD 28.6bn23.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.88%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 124.33

    61% of EV

    Forecast FCFF, final year
    USD 8.2bn
    Capex at depreciation, working capital in reinvestment
    USD 9.7bn
    Less reinvestment at g/ROIC (13.9% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 8.4bn
    ROIC (reported)
    17.9%
    Terminal value, undiscounted
    USD 159.7bn
    Terminal value, discounted
    USD 77.7bn
    Enterprise value
    USD 128.4bn
    Less net debt
    USD 22.7bn
    Equity value
    USD 105.7bn

    Exit at 10.0x EBITDA

    Value per shareUSD 129.19

    62% of EV

    Terminal value, undiscounted
    USD 168.2bn
    Terminal value, discounted
    USD 81.8bn
    Enterprise value
    USD 132.5bn
    Less net debt
    USD 22.7bn
    Equity value
    USD 109.8bn

    Spread between methods: 4%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.88%181.82194.94212.18235.69269.43
    6.88%142.75149.62158.22169.24183.76
    7.88%115.99119.74124.33130.02137.16
    8.88%96.5198.58101.08104.12107.86
    9.88%81.7282.8184.1385.7587.72

    Outlined: this model. Green text: above today's price of 109.71. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-4.0%3.0%1.8%
    EBIT margin13.0%10.3%9.4%
    Discount rate-7.9%8.5%
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.