Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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Profitability Ratios (Summary)
United Parcel Service Inc., profitability ratios
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Return on Sales | ||||||
| Operating profit margin | ||||||
| Net profit margin | ||||||
| Return on Investment | ||||||
| Return on equity (ROE) | ||||||
| Return on assets (ROA) | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The profitability metrics demonstrate a consistent decline across the observed period. While initially strong, each ratio exhibits a downward trajectory from 2021 through 2025, suggesting increasing pressure on earnings relative to revenue, equity, and assets.
- Operating Profit Margin
- The operating profit margin decreased steadily from 13.17% in 2021 to 8.87% in 2025. This indicates a shrinking ability to generate profit from core operations, potentially due to rising operating expenses or decreasing pricing power.
- Net Profit Margin
- A more pronounced decline is evident in the net profit margin, falling from 13.25% in 2021 to 6.28% in 2025. This suggests that factors beyond core operations, such as interest expense or taxes, are also contributing to the reduced profitability. The difference between the operating and net profit margins widens over time, highlighting the increasing impact of non-operating items.
- Return on Equity (ROE)
- Return on equity experienced the most significant reduction, plummeting from 90.44% in 2021 to 34.34% in 2025. This substantial decrease indicates a diminishing ability to generate profits from shareholder investments. While the initial value was exceptionally high, the subsequent decline warrants attention, potentially signaling issues with asset utilization or financial leverage.
- Return on Assets (ROA)
- The return on assets also decreased consistently, moving from 18.57% in 2021 to 7.62% in 2025. This indicates a reduced efficiency in utilizing assets to generate earnings. The parallel decline with the other ratios suggests a systemic issue impacting overall profitability rather than a specific asset-related problem.
The consistent downward trend across all four profitability ratios suggests a deteriorating financial performance. Further investigation is warranted to identify the underlying causes of these declines and assess the sustainability of the business model.
Return on Sales
Return on Investment
Operating Profit Margin
United Parcel Service Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating profit | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Transportation | ||||||
| Operating Profit Margin, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Operating profit margin = 100 × Operating profit ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin demonstrates a clear downward trend over the five-year period. While initially strong, profitability has decreased consistently from 2021 to 2025.
- Operating Profit Margin Trend
- In 2021, the operating profit margin stood at 13.17%. A slight decrease was observed in 2022, with the margin falling to 13.05%. The decline accelerated in subsequent years, with the margin decreasing to 10.05% in 2023, 9.30% in 2024, and further to 8.87% in 2025. This represents a cumulative decrease of approximately 32.8% over the five-year period.
The decrease in operating profit margin is correlated with fluctuations in both operating profit and revenue. While revenue increased from 2021 to 2022, it subsequently declined in 2023, 2024, and 2025. However, the decrease in operating profit was more pronounced than the decrease in revenue, indicating increasing cost pressures or decreasing pricing power.
- Relationship to Operating Profit and Revenue
- Operating profit increased modestly from US$12,810 million in 2021 to US$13,094 million in 2022, but then experienced a significant decline, reaching US$9,141 million in 2023 and continuing to fall to US$7,867 million in 2025. Revenue peaked at US$100,338 million in 2022 before declining to US$90,958 million in 2023 and US$88,661 million in 2025. The disproportionate decrease in operating profit relative to revenue suggests that the company is facing challenges in maintaining profitability despite revenue generation.
The consistent erosion of the operating profit margin warrants further investigation into the underlying factors contributing to this trend. Potential areas of focus include cost of goods sold, operating expenses, and pricing strategies.
Net Profit Margin
United Parcel Service Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Transportation | ||||||
| Net Profit Margin, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net profit margin = 100 × Net income ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin demonstrates a clear declining trend over the five-year period. While initially strong, profitability, as measured by this ratio, has decreased significantly.
- Net Profit Margin Trend
- In 2021, the net profit margin stood at 13.25%. This figure decreased to 11.51% in 2022, representing a contraction of 1.74 percentage points. The decline accelerated in 2023, with the margin falling to 7.37%, a substantial decrease of 4.14 percentage points from the prior year. This downward trend continued into 2024 and 2025, with margins reported at 6.35% and 6.28% respectively. The difference between 2024 and 2025 is minimal, suggesting a potential stabilization at a lower level of profitability.
The observed decrease in net profit margin coincides with fluctuations in both net income and revenue. While revenue increased from 2021 to 2022, the net profit margin decreased, indicating that the increase in revenue did not translate proportionally into higher profits. Revenue then decreased in 2023, 2024, and 2025, while net income experienced a more significant decline, further contributing to the reduced net profit margin.
- Relationship to Net Income and Revenue
- Net income decreased from US$12,890 million in 2021 to US$5,572 million in 2025, a reduction of approximately 56.8%. Revenue experienced a more moderate decrease, falling from US$97,287 million in 2021 to US$88,661 million in 2025, representing a decline of roughly 8.6%. The disproportionate decrease in net income relative to revenue suggests increasing costs or other factors impacting profitability beyond simple sales volume.
The stabilization of the net profit margin between 2024 and 2025, although at a reduced level, warrants further investigation. It is important to analyze the underlying cost structure and revenue drivers to understand the reasons for the initial decline and the potential factors contributing to the recent leveling off.
Return on Equity (ROE)
United Parcel Service Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Equity for controlling interests | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| ROE, Sector | ||||||
| Transportation | ||||||
| ROE, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROE = 100 × Net income ÷ Equity for controlling interests
= 100 × ÷ =
2 Click competitor name to see calculations.
The return on equity (ROE) exhibited a significant decline over the five-year period. While initially high, the ratio demonstrated a consistent downward trajectory, stabilizing at a lower level in the most recent years.
- ROE Trend
- In 2021, ROE stood at 90.44%. This figure represented a substantial return for equity holders. However, a marked decrease was observed in 2022, with ROE falling to 58.36%. The decline continued in 2023, reaching 38.76%, and further decreased to 34.59% in 2024. By 2025, ROE stabilized at 34.34%, indicating the rate of decline had slowed, but remained considerably lower than the 2021 level.
- Net Income Influence
- Net income decreased from US$12,890 million in 2021 to US$5,572 million in 2025. This substantial reduction in profitability contributed significantly to the observed decline in ROE. The decreasing net income exerted downward pressure on the ratio, as it represents the numerator in the ROE calculation.
- Equity Impact
- Equity for controlling interests increased from US$14,253 million in 2021 to US$19,786 million in 2022, before decreasing to US$16,227 million in 2025. While the initial increase in equity partially offset the impact of declining net income in 2022, the subsequent decrease in equity in later years did not prevent the overall ROE decline. The fluctuating equity base demonstrates a complex relationship with the profitability trends.
The stabilization of ROE around 34% in the final two years suggests a potential leveling off of performance, although this remains significantly below the initial value. Further investigation into the underlying drivers of both net income and equity is warranted to understand the sustainability of this trend.
Return on Assets (ROA)
United Parcel Service Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| ROA, Sector | ||||||
| Transportation | ||||||
| ROA, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibits a consistent downward trend over the five-year period. While initially strong, the ratio demonstrates a significant decline, indicating diminishing profitability relative to the company’s asset base.
- Overall Trend
- A clear decreasing pattern is observed in ROA, moving from 18.57% in 2021 to 7.62% in 2025. This represents a substantial reduction in the efficiency with which assets are being utilized to generate profits.
- Year-over-Year Changes
- From 2021 to 2022, ROA decreased from 18.57% to 16.24%, a reduction of 2.33 percentage points. The decline accelerated between 2022 and 2023, with ROA falling to 9.47%, representing a decrease of 6.77 percentage points. This downward momentum continued into 2024, with a further decrease to 8.25%, and then to 7.62% in 2025.
- Relationship to Net Income and Total Assets
- The decrease in ROA correlates with a decline in net income. While total assets remained relatively stable between 2021 and 2024, a slight increase is noted in 2025. However, the reduction in net income has a more pronounced effect on the ROA calculation, driving the overall downward trend. The consistent decline in net income, coupled with relatively stable asset levels, suggests a weakening ability to generate earnings from existing resources.
The sustained decrease in ROA warrants further investigation to determine the underlying causes. Potential factors could include increased operating costs, decreased sales, or inefficient asset management. Continued monitoring of this ratio is recommended to assess the long-term implications for the company’s financial performance.