Strong quarter and restored guidance strengthen FedEx’s position amid UPS weakness

Following a strong quarter, FedEx reinstated its earnings and revenue guidance and reaffirmed its cost-reduction plans. This strengthened investor confidence and opened up potential for further share price growth.

FedEx Corporation (NYSE: FDX) reported Q1 FY2026 results ahead of analyst expectations. Revenue rose 3% year-on-year to 22.24 billion USD, while earnings per share reached 3.83 USD. Operating profitability also improved, supported by a 4% increase in average daily US delivery volumes and a 2% rise in revenue per parcel.

The company reinstated its full-year forecast, projecting revenue growth of 4–6% and EPS in the range of 17.20–19.00 USD. FedEx plans to invest approximately 4.5 billion USD in development and continue its 1 billion USD cost-reduction program. It also confirmed its plan to spin off FedEx Freight as a separate company by June 2026.

The main issue in the quarter was a decline in international volumes due to tighter duty-free import rules. This resulted in a revenue reduction of 150 million USD for the quarter and could lead to losses of up to 1 billion USD for the year. Another risk stems from the expiry of the contract with the US Postal Service (USPS), but FedEx has already begun cutting unprofitable routes and is continuing to optimise its network to offset the lost volumes.

The market reaction to the FedEx report was cautiously positive. Shares rose immediately in after-hours trading following the release, driven by earnings and revenue that exceeded analyst forecasts, as well as the reinstatement of full-year guidance.

However, further upside was limited by concerns over the 3% decline in international shipments and the unresolved situation regarding new duty-free restrictions. Even so, the very fact that the company reinstated guidance, together with confidence in the cost-saving program and the upcoming spin-off of FedEx Freight, was taken as a sign of greater business transparency. Additional support came from the announcement of an average 5.9% tariff increase effective from January 2026. Overall, investors saw progress in the US domestic market and improved cost discipline.

This article examines FedEx Corporation, outlines its revenue sources, reviews FedEx’s performance over the past quarters of FY2025 and Q1 FY2026, and sets out expectations for FY2026. It also provides a technical analysis of FDX shares, forming the basis for a FedEx stock forecast for 2025.

About FedEx Corporation

FedEx Corporation is an American logistics company founded in 1971 by Frederick Smith. The company provides global express delivery, freight transportation, logistics, and e-commerce services. In 1978, it went public through an IPO on the NYSE, where its stock trades under the ticker FDX.

FedEx holds a leading position in the global logistics and delivery market, though its market share varies by region and delivery segment. Major competitors include Amazon Logistics, DHL, and United Parcel Service, Inc. (NYSE: UPS).

FedEx Corporation’s business model

FedEx’s business model is centred around providing logistics and transportation services, primarily express delivery and freight transportation. The company generates revenue from various business segments, each catering to different client categories: individuals, small and medium-sized enterprises, and large corporations. The main sources of the company’s income are as follows:

• FedEx Express: one of the key segments responsible for the fast delivery of parcels and documents worldwide. Revenue is generated through tariffs based on weight, distance, and delivery speed
• FedEx Ground: ground delivery of freight and parcels, which is typically slower but more cost-effective than air transportation. This segment is popular among small and medium-sized enterprises, as well as in the e-commerce sector
• FedEx Freight: this segment transports freight across the US and international routes, focusing on large and heavy cargo.
• FedEx Services: provides logistics and business solutions, including supply chain management, IT services, and e-commerce support for corporations
• FedEx Office: offers retail and business services, including document printing, mailbox rentals, and package handling and shipping at service points

The company reports on two segments – FedEx Express and FedEx Freight – with other divisions categorised under ‘Other Income’.

FedEx Corporation Q1 FY2025 report

On 19 September 2024, FedEx posted disappointing results for the Q1 fiscal year 2025, which ended on 31 August 2024. Below are the key figures compared to last year’s corresponding period:

• Revenue: 21.60 billion USD (-0.5%)
• Net income: 890 million USD (-26.0%)
• Earnings per share: 3.60 USD (-21.0%)
• Operating margin: 5.20% (-190 basis points)

Revenue by segment:

• FedEx Express: 18.30 billion USD (-1.0%)
• FedEx Freight: 2.32 billion USD (-2.0%)
• Other and eliminations: 945 million USD (+9.0%)

The fundamental analysis of FedEx’s report indicated stagnant revenue despite increased expenses. Transportation costs rose by 5% to 5.27 billion USD, and business optimisation costs increased by 22% to 128 million USD. As a result, net income declined from 1.16 billion to 0.89 billion USD. Analysts’ forecasts were not met: revenue was expected to be 360 million USD higher (21.96 billion USD), and earnings per share were projected at 4.86 USD, above the actual 3.60 USD. Following the report’s release, FedEx stock plunged by over 15%.

If the logistics company shows no revenue growth, this may indicate a slowdown in the US economy. Additional pressure came from a 0.50% Federal Reserve interest rate cut, which may suggest the peak of economic growth.

FedEx’s outlook for the fiscal year 2025 was cautious, with revenue expected to rise moderately and the EPS forecast lowered from 18.25-20.25 USD to 17.90-18.90 USD.

FedEx CEO Rajesh Subramaniam noted that the weak results were due to reduced demand for express deliveries, higher operating costs, and a downturn in industrial production. Despite cautious optimism about the second half of 2024, the company maintained a moderate outlook due to economic uncertainty.

FedEx Corporation Q2 FY2025 report

On 19 December 2024, FedEx posted disappointing results for the Q2 fiscal year 2025, discouraging investors again. Below are the main highlights:

• Revenue: 22.00 billion USD (-1.0%)
• Net income: 0.99 billion USD (-1.9%)
• Earnings per share: 4.05 USD (+1.5%)
• Operating margin: 5.60% (+10 basis points)

Revenue by segment:

• FedEx Express: 18.84 billion USD (+0.3%)
• FedEx Freight: 2.18 billion USD (-11.2%)
• Other and eliminations: 949 million USD (+0.9%)

FedEx’s management, commenting on the 1% revenue decline, attributed it to a challenging economic environment, particularly the weakness in the US industrial economy and the expiration of its air freight contract with the US Postal Service (USPS), which ended on 29 September 2024 and had previously generated approximately 2 billion USD in annual revenue. However, there were also positive developments, including a 9% increase in international export parcel volume and cost-saving benefits from the DRIVE program, which resulted in savings of 540 million USD in the last quarter.

The company also highlighted the completion of a one billion USD share buyback and announced plans to spin off FedEx Freight into a separate publicly traded company within the next 18 months to increase stockholder value.

For Q3 of the fiscal year 2025, management expects positive effects from increased DRIVE savings and higher revenue due to the Cyber Week event dedicated to cybersecurity, digital technology, and the IT industry. However, these benefits may be offset by the loss of the USPS contract.

The fiscal 2025 outlook expects revenue to remain approximately the same as last year. The EPS forecast has been adjusted to a range between 19.00 USD and 20.00 USD, down from 20.00 USD to 21.00 USD.

FedEx Corporation Q3 FY2025 report

On 20 March 2025, FedEx reported disappointing results for Q3 of the fiscal year 2025, discouraging investors again. Below are the key figures:

• Revenue: 22.20 billion USD (+0.9%)
• Net income: 1.09 billion USD (+12.3%)
• Earnings per share: 4.51 USD (+16.8%)
• Operating margin: 6.70% (+40 basis points)

Revenue by segment:

• FedEx Express: 19.81 billion USD (+2.7%)
• FedEx Freight: 2.08 billion USD (+27.2%)
• Other and eliminations: 890 million USD (+3.3%)

In his commentary on the report, Rajesh Subramaniam noted revenue growth in Q3 compared to the same period last year, marking the first such increase in fiscal year 2025. He stated that FedEx improved profitability despite a particularly challenging operating environment, which included a busy festive season and severe weather conditions. Management also emphasised the success of the DRIVE program, which helped save 600 million USD in costs during the quarter, contributing to a 12% rise in adjusted operating income, which increased to 1.8 billion USD from the previous year.

FedEx’s management expressed cautious optimism regarding its Q4 fiscal year 2025 outlook. The company is expected to continue pursuing its revenue quality strategy and increase cost savings from the DRIVE program. Specifically, it projects closing Q4 FY2025 with annual cost savings exceeding 2.2 billion USD, in line with its target for the full fiscal year 2025.

However, management also anticipates ongoing challenges in the FedEx Freight segment, though these are expected to ease somewhat compared to previous quarters. Revenue in the FedEx Express segment is forecast to remain nearly unchanged, while the FedEx Freight segment is expected to experience a decline in revenue compared to the prior year.

FedEx revised its full fiscal year 2025 forecast downward, now expecting EPS to range from 18.00 USD to 18.60 USD, down from 19.00-20.00 USD. This revision reflects ongoing economic challenges and uncertainty regarding global trade policies under the Donald Trump administration.

FedEx Corporation Q4 FY2025 report

On 24 June 2025, FedEx released its Q4 FY2025 results, which this time exceeded investor expectations. Key performance indicators are as follows:

• Revenue: 22.21 billion USD (+1%)
• Net profit: 1.46 billion USD (+9%)
• Earnings per share (EPS): 6.07 USD (+12%)
• Operating margin: 8.4% (+150 basis points)

Revenue by Segment:

• FedEx Express: 18.98 billion USD (+1%)
• FedEx Freight: 2.30 billion USD (−4%)
• Other and eliminations: 946 million USD (+2%)

FedEx delivered a solid performance in Q4 FY2025, with adjusted EPS of 6.07 USD on revenue of 22.2 billion USD – both metrics exceeding expectations, despite only modest year-on-year revenue growth.

Instead of issuing full-year guidance, FedEx provided a limited outlook for Q1 FY2026, forecasting revenue growth between 0% and 2% and adjusted EPS in the range of 3.40–4.00 USD. This forecast was below analyst expectations.

There are, however, encouraging signals. The company has already achieved 2.20 billion USD in cost savings through the DRIVE program and expects a further 1.00 billion USD in FY2026, supported by both DRIVE and the Network 2.0 initiative. According to CEO Raj Subramaniam, around 200 million USD of these savings will be realised in the first quarter, with the main impact expected mid-year.

FedEx also continues to return capital generously to shareholders. The annual dividend was increased by 5% to 5.80 USD, and 2.10 billion USD remains under its share buyback program. Cash flow remains strong, with a conversion rate of nearly 90% over the past year.

A potential weakness is management’s decision not to provide full-year guidance, which underlines the ongoing external uncertainty – particularly concerning trade tariffs between the US, China, and Europe. Additional pressure comes from reduced freight volumes from Asia to the US, the expiration of the USPS contract, and continued weakness in the B2B segment. However, FedEx is actively shifting its focus to higher-margin, oversized shipments. It has signed a new rural delivery agreement with Amazon, which may help offset some of the pressure on revenue.

The Q4 FY2025 report demonstrated the company’s resilience in an unstable global environment, with effective cost control adding to investor confidence. In addition, shareholders continue to receive generous payouts. However, the cautious outlook and global risks offer little room for short-term optimism.

For long-term investors, the key question remains whether FedEx can successfully translate its structural reforms and network improvements into profit growth by mid-FY2026. If so, the current share price may represent an attractive entry point.

FedEx Corporation Q1 FY2026 report

On 18 September 2025, FedEx published its results for Q1 FY2026, which ended on 31 August 2025. The key figures are as follows:

• Revenue: 22.24 billion USD (+3% year-on-year)
• Net profit: 0.91 billion USD (+2% year-on-year)
• Earnings per share: 3.83 USD (+6% year-on-year)
• Operating margin: 5.8% (+20 basis points)

Revenue by segment:

• FedEx Express: 19.12 billion USD (+4% year-on-year)
• FedEx Freight: 2.26 billion USD (–3% year-on-year)
• Other and eliminations: 871 million USD (+60% year-on-year)

FedEx delivered Q1 FY2026 results ahead of expectations. Revenue reached 22.2 billion USD (+3% year-on-year), adjusted EPS was 3.83 USD (+6% year-on-year), and the non-GAAP operating margin expanded to 5.8% (+20 bps). Consensus had forecast around 21.66 billion USD in revenue and 3.68 USD in EPS.

Among the negative factors in the quarter were trade barriers and tariffs: the removal of the de minimis regime (duty-free import of low-value goods) reduced quarterly revenue by 150 million USD and, according to FedEx, could cost up to around 1 billion USD for the full year. International export volumes fell 3%, while rising wages and transport costs, the expiry of the USPS contract, and a one-off tax expense of 16 million USD further weighed on performance. The FedEx Freight segment also posted weaker operating results.

On the positive side, the domestic US market remained resilient, with average daily parcel volume rising 4% and revenue per parcel increasing 2%. The effects of the ongoing cost-saving program (target: 1 billion USD) supported margins. The company also repurchased 0.5 billion USD worth of shares and ended the quarter with 6.2 billion USD in cash. Additionally, it announced an average tariff increase of 5.9% effective from 5 January 2026 and confirmed the planned spin-off of FedEx Freight into a standalone public company by June 2026.

Management forecasts FY2026 revenue growth of 4–6% and adjusted EPS in the range of 17.20–19.00 USD. Planned targets include capital expenditure of approximately 4.5 billion USD, an effective tax rate of around 25%, and delivery of 1 billion USD in structural cost savings. No quarterly guidance was issued for Q2, but the company expects a moderately strong peak season, characterised by a slight increase in average daily peak volumes and growth in total peak traffic, implying a sequential improvement in Q2 compared to Q1, while risks from international trade remain.

Fundamental analysis of FedEx Corporation

Below is the fundamental analysis of FDX following the Q1 FY2026 results:

• Liquidity and balance sheet: cash – 6.17 billion USD, accounts receivable – 11.52 billion USD, current assets – 19.34 billion USD against current liabilities of 15.52 billion USD. FedEx has two confirmed credit facilities of 1.75 billion USD each (totalling 3.5 billion USD), expiring in March 2027 and March 2029. In July 2025, the company issued new unsecured bonds worth 997 million USD, using part of the proceeds to repay debt of 625 million USD maturing in August 2025. This helped reduce near-term refinancing risk
• Cash flow: operating cash flow for the quarter was 1.716 billion USD, with CapEx of 623 million USD, resulting in free cash flow of approximately 1.1 billion USD. Dividends amounted to 345 million USD and share buybacks to 500 million USD, meaning the total shareholder return of 845 million USD was fully covered by quarterly FCF. In addition, the company raised 997 million USD and repaid 625 million USD of debt, increasing cash on the balance sheet to 6.166 billion USD. Thus, buybacks and dividends were financed primarily from current cash generation, with moderate refinancing used to maintain liquidity
• Debt load: at quarter-end, total debt stood at around 21.2 billion USD, of which 0.883 billion USD falls due within a year. With 6.166 billion USD in cash, net debt amounts to roughly 15.0 billion USD. The company paid 119 million USD in interest during the quarter, with operating profit covering these expenses about tenfold, indicating strong financial resilience. In FY2026, FedEx plans to contribute up to 400 million USD to pension funds (200 million USD already allocated in Q1) and spend approximately 4.5 billion USD on capital expenditures. These outlays are within reasonable limits, given that in FY2025 the company generated 7.036 billion USD in operating cash flow

Conclusion of the fundamental analysis of FDX. FedEx’s financial strength at the end of Q1 FY2026 remains high. The company continues to generate stable cash flow, sufficient to cover capital expenditure, dividends, and share buybacks. Liquidity remains strong and debt levels are manageable – interest payments are comfortably covered by operating profit, providing a buffer even in an environment of rising rates and volatile demand. Adverse effects from changes in trade regulations and tariffs are already evident, but these are offset by growth in domestic volumes and the ongoing cost-reduction program. Management has also reaffirmed its full-year revenue and earnings guidance, underscoring its control over profitability and cash flow. Taken together, the balance sheet structure, debt coverage, and self-financing capacity point to strong financial stability with moderate market risks.

Comparative analysis of FedEx and UPS financial results

Based on the latest reports, FedEx appears stronger than UPS in growth and operational improvements, while UPS demonstrates greater stability and profitability but lags in growth momentum.

In Q1 FY2026, FedEx exceeded analyst expectations, with US delivery volumes rising 4%, revenue per parcel increasing 2%, and operating profitability improving. The company reinstated its full-year guidance, projecting revenue growth of 4–6% and EPS in the range of 17.20–19.00 USD. It also launched a new cost-reduction plan targeting an additional 1 billion USD in savings and allocated approximately 4.5 billion USD to investment in development.

However, FedEx faces challenges: it lost its contract with the US Postal Service (USPS), while changes to duty-free import rules from China and other countries have already reduced quarterly revenue by 150 million USD and could impact up to 1 billion USD for the year. Even so, the company is actively cutting costs and preparing to spin off FedEx Freight into a separate entity – a move expected to enhance business efficiency.

By contrast, UPS maintains higher margins (i.e. profitability from revenue) but is experiencing weaker growth and volumes. In Q2 FY2025, revenue was slightly above expectations, but earnings came in just below forecast. US delivery volumes declined, which weighed on profit. The international business delivered modest growth and remained profitable. The Supply Chain Solutions segment contracted due to the 2024 sale of Coyote. The company did not provide revenue and earnings guidance for the year but reaffirmed plans for 3.5 billion USD in cost savings, 3.5 billion USD in capital expenditures, and 5.5 billion USD in dividend payments.

A key strength for UPS is its new USPS contract – it now handles the bulk of air transport for the US Postal Service, whereas FedEx lost this business. This should support UPS’s capacity utilisation and revenue in the coming quarters.

In summary, in the short term, FedEx is coping better with current challenges – it is delivering growth, outperforming expectations, and offering a clear annual plan. UPS remains stronger in profitability and has gained a significant advantage through the USPS contract, but it needs to restore US volumes to return to growth. Both companies, however, remain vulnerable to tighter trade regulations and the removal of duty-free import thresholds.

Expert forecasts for FedEx Corporation stock

• Barchart: 16 of 30 analysts rated FedEx shares as Strong Buy, 2 as Moderate Buy, 10 as Hold, and 2 as Strong Sell. The maximum price target is 320 USD on the upside and 200 USD on the downside
• MarketBeat: 17 of 27 analysts assigned a Buy rating, 9 recommended Hold, and 1 advised Sell. The maximum price target is 337 USD on the upside and 221 USD on the downside
• TipRanks: 15 of 22 analysts rated the stock as Buy, 6 as Hold, and 1 as Sell. The maximum price target is 320 USD on the upside and 200 USD on the downside
• Stock Analysis: 6 of 17 experts rated FedEx shares as Strong Buy, 5 as Buy, 5 as Hold, and 1 as Strong Sell. The maximum price target is 320 USD on the upside and 221 USD on the downside

FedEx Corporation stock price forecast for 2025

The Q4 FY2025 report did not trigger significant movements in FDX shares, which continued to trade in the 215–240 USD range. The Q1 FY2026 report likewise prompted little investor reaction, with the stock remaining within the same band. However, the latest results show that the company is successfully overcoming emerging challenges while maintaining strong financial resilience. Based on the current performance of FedEx shares, the two possible forecast scenarios for 2025 are as follows:

• Base forecast for FedEx shares: this scenario assumes a breakout above resistance at 250 USD, which could act as a catalyst for FDX to rise towards its historical high of around 300 USD. If this level is surpassed, the share price may advance further to the next resistance at 370 USD. However, such a move would require a significant news trigger confirming the company’s strong revenue growth potential
• Alternative forecast for FedEx stock: this scenario assumes a break below support at 215 USD. In this case, the share price could decline towards 180 USD, where renewed investor demand for the stock is expected to emerge

Risks of investing in FedEx Corp stock

When investing in FedEx, it is essential to consider the risks the company may face. Below are the key factors that could negatively impact FedEx’s revenue:

• Economic sensitivity: FedEx’s financial performance is closely tied to the global economy. Economic downturns may lead to reduced demand for shipping services as businesses and consumers cut back on spending
• Intense competition: the logistics sector is highly competitive. FedEx faces significant pressure from major players such as UPS (NYSE: UPS) and DHL, as well as emerging competitors like Amazon (NASDAQ: AMZN), which is developing its own logistics network
• Fuel price volatility: as a logistics company, FedEx is heavily dependent on fuel prices. While fuel surcharges help offset costs, continuous price increases can raise shipment costs and lead to customer dissatisfaction due to higher tariffs, ultimately impacting revenue
• Dependence on the US market: a substantial portion of FedEx’s revenue is derived from the US. Economic challenges or market saturation within the US may limit growth opportunities and reduce overall revenue

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