3 Air-Freight & Cargo Stocks to Monitor in a Prosperous Industry

The Zacks Transportation-Air Freight and Cargo industry is grappling with persistent supply-chain disruptions. A challenging macroeconomic environment is characterized by inflation-induced high interest rates and the resultant weakness in package volumes.
 
Despite the abovementioned challenges, we believe that the space still has fuel left in the tank, especially for operators that target growth opportunities and operating efficiency initiatives. Even though economies are reopening, consumers’ thirst for online shopping is rampant. Cost-cutting efforts to drive the bottom line are commendable as well. Companies like United Parcel Service UPS, FedEx FDX and GXO Logistics GXO have been leveraging these favorable trends to their advantage. 

About the Industry

The companies belonging to the Zacks Transportation-Air Freight and Cargo industry provide air delivery and freight services. Most players in the space are involved in offering specialized transportation and logistics services. Some participants offer a range of supply-chain solutions, such as freight forwarding, customs brokerage, fulfillment, returns, financial transactions and repairs. The well-being of the companies in this industrial cohort is directly proportional to the health of the economy. Leading industry players, including FedEx, transport millions of packages each day across the globe. Apart from operating a ground fleet of multiple vehicles, some of these companies maintain an air fleet. While some players focus on providing air transportation services for passengers and cargo, others deliver services to entities that outsource air-cargo lifting requirements.

4 Key Trends to Watch in the Transportation-Air Freight & Cargo Industry

Prioritizing Shareholder Returns: With economic activities gaining pace from the pandemic lows, more and more companies are allocating their increasing cash pile by way of dividends and buybacks to pacify long-suffering shareholders. This underlines their financial strength and confidence in the business. Among the Transportation-Air Freight and Cargo industry players, FDX announced a 5.1% increase in the quarterly dividend in 2025.

Focus on Cost-Cuts to Drive Bottom Line: Despite signs of cooling inflation, the measure is still quite elevated. We note that the industry has been experiencing significant levels of inflation, including higher prices for labor, freight and fuel. The industry players are focusing on cost-cutting measures and making efforts to improve productivity and efficiency to mitigate the weaker-than-expected demand scenarios. Driven by the cost-cutting efforts, FDX reported better-than-expected results in the second quarter of fiscal 2026.

Demand Slowdown: A Grave Concern: Due to the decline in shipping demand, particularly in Asia and Europe, volumes are being hurt. Lackluster volumes are hurting the results of key industry players. Geopolitical uncertainty and still high inflation continue to hurt consumer sentiment and growth expectations. Below-par freight rates are also hurting the industry’s prospects.

E-commerce Still a Force to Reckon With: It is hardly surprising that the pace of growth of e-commerce demand has slowed from the levels witnessed at the peak of the pandemic, with the reopening of economies. However, it remains impressive, driven by the convenience associated with online shopping. The race to digitization also supports the momentum in e-commerce growth. E-commerce demand strength should continue to support the growth of the industry players.

 

Zacks Industry Rank Indicates Bullish Trends

The Zacks Air Freight and Cargo industry, housed within the broader Zacks Transportation sector, currently carries a Zacks Industry Rank #97. This rank places it in the top 40% of 244 Zacks industries.

The group’s Zacks Industry Rank, the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining in confidence in this group’s earnings growth potential. The industry's earnings estimate for 2026 has increased 1.5% since November 2025.

Before we present a few stocks from the industry that investors can retain in their portfolios, let’s take a look at the industry’s recent stock market performance and the valuation picture.

Industry Lags the S&P 500 and the Sector

The Zacks Air Freight and Cargo industry has underperformed the Zacks S&P 500 composite as well as the broader Transportation sector over the past year.

The industry has decreased 6.3% over this period compared with the S&P 500’s growth of 14.9% and the broader sector’s decline of 0.1%.

One-Year Price Performance

Industry's Current Valuation

On the basis of the trailing 12-month enterprise value-to-EBITDA (EV/EBITDA), a commonly used multiple for valuing Transportation-Air Freight and Cargo stocks, the industry is currently trading at 9.8X compared with the S&P 500’s 18.8X. It is also lower than the sector’s trailing 12-month EV/EBITDA of 10.79X.

Over the past five years, the industry has traded as high as 13.42X, as low as 7.4X and at the median of 10.03X.

Enterprise Value-to-EBITDA Ratio (TTM)

 

3 Transportation-Air Freight and Cargo Stocks to Keep a Tab On

The aforementioned stocks presently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

UPS: The company is based in Atlanta. We are appreciative of the company's efforts to reward its shareholders through dividends and buybacks. Robust free cash flow generation by UPS is a major positive and leads to an uptick in shareholder-friendly activities.

Cost-cutting efforts are supporting its bottom line. Impressive e-commerce demand and expansion efforts should serve UPS well in the coming year. Its earnings outshone the Zacks Consensus Estimate in three of the last four quarters and missed once, the average beat being 11.2%.

Price and Consensus: UPS

FedEx: FDX’s efforts to reward its shareholders even in these uncertain times are praiseworthy. Apart from paying dividends, FDX is active on the buyback front. FedEx's liquidity position is also solid. The company’s efforts to cut costs are driving its bottom line.

FDX’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the consensus mark in the other one). The average beat is 5.68%.

Price and Consensus: FDX

GXO Logistics: We are impressed by GXO’s efforts to strengthen its logistics capabilities. Increased e-commerce, automation and outsourcing are serving the company well.

GXO’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 5.25%. Its shares have risen 26% over the past year.

 

Price and Consensus: GXO

 

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United Parcel Service, Inc. (UPS): Free Stock Analysis Report
 
FedEx Corporation (FDX): Free Stock Analysis Report
 
GXO Logistics, Inc. (GXO): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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