My friend has had his money invested in United Parcel Service, Inc. (NYSE:UPS) for a little over a year now. He thought it was time to take a closer look at how the investment was doing. The shares had given him a return of about 3.2%, which isn’t bad, but he’s really into risk-adjusted returns.

He delved into the financials and future prospects of UPS. After doing some analysis, he came to the decision that it’s time to sell his UPS shares, and here’s why.

Firstly, he predicted a significant drop in operating income and noticed that the dividend coverage wasn’t as strong as it used to be. The risk premium on the stock had also gone up, making it less appealing compared to safer government bonds.

He checked the recent financial results and found that the first quarter of 2023 didn’t look as promising as he had hoped. The revenue, operating profits, and net income were down compared to the previous year. Additionally, the company’s capital structure had suffered with increased debt and lower cash.

Doing his forecasting game, he expected the downward trends to continue, and he wasn’t very confident about it. His forecast aligned pretty closely with what Wall Street was saying, but that didn’t give him enough confidence to stick around.

My friend is all about buying low and selling high, but right now, he didn’t find the stock compellingly priced. The valuation hadn’t changed much since he bought it, but the increased risk premium made it less attractive.

So, in the end, he’s decided to sell his UPS shares today and look for better investment opportunities elsewhere. He believes that being informed and making decisions that match your risk tolerance are essential in investing.