Here's our initial take on FedEx's (NYSE: FDX) financial report.
Key Metrics
| Metric |
Q4 FY24 |
Q4 FY25 |
Change |
vs. Expectations |
| Revenue |
$22.1 billion |
$22.2 billion |
0.5% |
Beat |
| Adjusted EPS |
$5.41 |
$6.07 |
12% |
Beat |
| Operating margin |
8.5% |
9.1% |
60 bp |
n/a |
| Operating income |
$1.87 billion |
$2.02 billion |
8% |
n/a |
EPS = earnings per share. BP = basis points.
FedEx Beats on Strong Cost Control
FedEx and other shipping companies have been navigating through traffic in recent quarters. Fears of a slowing economy and, more recently, uncertainty about tariffs have caused large customers to pull back on shipping, depressing demand and volumes.
FedEx is controlling what it can, topping consensus expectations and posting 8% operating income and 12% adjusted earnings-per-share growth despite flat year-over-year revenue. The company said that cost benefits from its ongoing DRIVE restructuring initiative, coupled with increased U.S. and international export volume, and a higher yield base helped to drive improvement to operating results.
Operating margin increased by 60 basis points year over year to 9.1%.
This marks the end of FedEx's fiscal year. The company said it returned $4.3 billion to stockholders in its fiscal 2025 through stock repurchases and dividends, continuing a campaign that has pushed FedEx's share count down by 8% over the past five years.
The earnings report comes just days after the passing of Fred Smith, FedEx's founder and executive chairman. CEO Raj Subramaniam led the earnings release with a tribute to Smith, saying "his legacy of innovation, leadership, and philanthropy will continue to inspire future generations."
Current director R. Brad Martin was named the new board chair.
Immediate Market Reaction
The results suggest that the macro headwinds that have plagued FedEx so far in 2025 are likely to continue in the months ahead. Shares of FedEx, already down 16% year to date heading into earnings, were down another 4% in aftermarket trading following the release but ahead of the company's call with investors.
What to Watch
FedEx is forecasting fiscal first-quarter revenue to be flat to up 2% and forecasted earnings of between $3.40 and $4.00. Even at the top end of that range, that is a disappointment relative to Wall Street's $4.03-per-share consensus estimate.
The company is targeting an additional $1 billion in cost cuts in the new fiscal year but held off on providing any firm revenue or earnings guidance for the next four quarters. It also remains on track to separate its FedEx Freight trucking business by mid-2026.
The outlook could get less clear before it improves. We are now just weeks away from the July 9 deadline for the U.S. to reach trade deals with Europe. With so much uncertainty about the direction of tariffs, it is unlikely that large FedEx customers will boost demand for shipping services any time soon.
FedEx remains stuck in traffic, with few opportunities to accelerate ahead.
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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FedEx. The Motley Fool has a disclosure policy.
