Buy, Sell, or Hold FedEx Stock as Its Q4 Earnings Approach?

This week, investors will get insight into the broader state of the transportation industry as it relates to delivery services with FedEx FDX set to report results for its fiscal fourth quarter after market hours on Tuesday, June 24^th.

Notably, tariff-related volume headwinds have contributed to a more challenging operating environment for FedEx and other shipping and logistics companies, including its main competitor UPS UPS.

That said, FedEx has stated it is actively helping customers navigate the evolving tariff landscape by updating their international logistics tools and customs support to address higher duty costs and additional clearance requirements.

FedEx’s Q4 Expectations & Outlook

Based on Zacks' estimates, FedEx’s Q4 sales are thought to have dipped by over 1% to $21.73 billion compared to $22.11 billion in the comparative quarter. Optimistically, FedEx’s Q4 earnings are still expected to rise 9% to $5.93 per share from EPS of $5.41 a year ago.

FedEx is expected to round out its fiscal 2025 with total sales down less than half a percentage point at $87.44 billion, although FY26 sales are projected to rebound and rise 2% to $89.41 billion. Plus, FedEx is slated to end FY25 with annual earnings up 2%, and FY26 EPS is forecasted to spike another 8% to $19.57.

However, it’s noteworthy that FedEx has missed sales estimates in three of its last four quarterly reports and has come up short of earnings expectations in two of the last four quarters, with an average EPS surprise of -5.79%

FDX Performance & Valuation Comparison

Attributed to tariff concerns, FedEx stock has fallen nearly 20% year to date, which has roughly matched UPS but has noticeably trailed the broader market’s virtually flat performance and competitor GXO Logistics’ GXO +12%. FDX is now down 6% over the last three years, with the benchmark S&P 500 sitting on gains of +53%.

Despite a lackluster stock performance in recent years, FedEx’s valuation is very intriguing, with FDX trading at just 11.5X forward earnings. Trading beneath the benchmark’s 23X forward earnings multiple, FedEx stock trades at a discount to GXO Logistics' 19X and UPS’s 14X. FDX also trades at less than 1X forward sales.

FedEx’s Attractive Dividend

FedEx’s dividend makes its “cheap” valuation more attractive to long-term investors. At current levels, FDX has a 2.44% annual dividend. This may be underwhelming compared to UPS’s 6.61% yield but tops the S&P 500’s 1.25% average, and GXO Logistics doesn’t offer a payout.

Furthermore, FedEx’s annualized dividend growth rate over the last five years is an eye-catching 21.96%, and its 31% payout ratio suggests there is plenty of room for more dividend hikes in the future.

Bottom Line

Ahead of its Q4 results, FedEx stock lands a Zacks Rank #3 (Hold). While FDX appears to be offering sound value to investors, better buying opportunities may still be ahead as FedEx will need to reconfirm the ability to overcome tariff-related headwinds in its Q4 report.

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

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