FedEx Shares Down Almost 6% Despite Q4 Earnings & Revenues Beat

Shares of FedEx Corporation FDX have lost 5.96% in after-market trading on June 24, 2025. The downside came on the back of the statement given by Raj Subramaniam, FDX’s president and chief executive officer, on the company’s earnings call. He stated, “The global demand environment remains volatile. We’re staying close to our customers to help them plan and adapt as they navigate trade policy changes.”

Citing uncertainty surrounding U.S. trade policies, especially with regard to China, FDX did not unveil any earnings and revenue predictions for the full year. This too displeased investors, resulting in the stock sliding despite reporting solid fourth-quarter fiscal 2025 (ended May 31, 2025) results.

FDX’s earnings and revenues surpassed the Zacks Consensus Estimate in the quarter. Quarterly earnings (excluding 81 cents from non-recurring items) of $6.07 per share beat the Zacks Consensus Estimate of $5.93 as well as improved 12.2% year over year. Share repurchases boosted fourth quarter earnings by 28 cents per share.

Revenues of $22.2 billion came ahead of the Zacks Consensus Estimate of $21.7 billion and improved 0.5% from the year-ago fiscal quarter’s reported figure.

Quarterly results benefited from cost reduction benefits from the DRIVE program initiatives, higher volume at Federal Express and higher base yield at each transportation segment.

Operating income, on a reported basis, increased 15% to $1.79 billion from the year-ago fiscal quarter’s reported number. Operating margin rose to 8.1% from 7% in the year-ago reported quarter. Operating income and margin improved in the fiscal fourth quarter, as the company achieved its DRIVE structural cost reduction targets.

Operating expenses (reported basis) decreased by 1% to $20.4 billion.

FedEx Corporation Price, Consensus and EPS Surprise

FedEx Corporation price-consensus-eps-surprise-chart | FedEx Corporation Quote

Raj Subramaniam, FDX president and chief executive officer, stated, “I am proud of the FedEx team for a solid finish to the fiscal year, delivering excellent service for our customers while achieving our structural cost reduction target, in the face of ongoing headwinds. We will continue to leverage the unique scale and flexibility of our global network to support our customers as the demand environment evolves. Looking ahead, I’m confident that our transformation initiatives, which are focused on integrating our networks and further reducing our cost-to-serve, will create meaningful long-term value.”

Segmental Performance During the Quarter

Federal Express and FedEx Freight now represent the company's major service lines and constitute its reportable segments. Further, the results of FedEx Custom Critical are now included in the FedEx Freight segment instead of the Federal Express segment.

FedEx Express segment’s revenues grew 1% year over year to $18.9 billion. The Federal Express segment was aided by cost reduction benefits from DRIVE, increased U.S. and international export volume, and higher base yield. These factors were partially offset by higher purchased transportation and wage rates, one fewer operating day, and the expiration of the U.S. Postal Service contract. Our estimate is pegged at $18.1 billion.

FedEx Freight revenues fell 4% from the year-ago fiscal quarter’s reported figure to $2.29 billion (in line with our model estimate figure). The FedEx Freight segment was hurt by lower fuel surcharges, reduced weight per shipment, higher healthcare costs, increased wage rates and one fewer operating day. These factors were partially offset by higher base yield and a $33 million gain on the sale of a facility.

Average daily shipments fell 1% year over year. Capital expenditures for the reported quarter came in at $1.47 billion.

Liquidity

FedEx exited fourth-quarter fiscal 2025 with cash and cash equivalents of $5.50 billion compared with $5.13 billion at the end of the prior quarter. Long-term debt (less current portion) was $19.1 billion compared with $19.5 billion at the end of the prior quarter.

During fiscal 2025, FDX returned almost $4.3 billion to shareholders, which includes $3 billion of share repurchases (above the original $2.5 billion stock repurchase plan) and $1.3 billion of dividend payments. Repurchases during fiscal 2025 totaled almost 10.9 million shares or 4.5% of the shares outstanding at the beginning of the year. As of May 31, 2025, FDX had $2.1 billion available for repurchases under its 2024 stock repurchase authorization.

Outlook

For the first quarter of fiscal 2026, FedEx expects revenue growth in the range of flat to 2% rate on a year-over-year basis. Effective tax rate (ETR) is estimated around 25%.

Diluted earnings per share (EPS) are anticipated between $2.90 and $3.50, and after excluding costs related to business optimization initiatives and the planned spin-off of FedEx Freight, EPS is expected between $3.40 and $4.00.

For full-year fiscal 2026, FedEx anticipates permanent cost reductions of $1 billion from the DRIVE and Network 2.0 transformation programs. Pension contributions are now expected to be up to $600 million, compared with $800 million in fiscal 2025. FDX anticipates capital spending of $4.5 billion, prioritizing investments in network optimization and efficiency improvement, which includes fleet and facility modernization and automation.

For fiscal 2026, FedEx stays focused on rewarding its shareholders, including the previously announced 5% dividend hike (28 cents per share), which translates to $5.80 annualized per share. The company also aims to continue a robust share repurchase program.

Zacks Rank of FDX Stock

FedEx currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Latest Earnings Results of Some Other Stocks Belonging to FDX’s Industry

United Parcel Service, Inc. (UPS) reported first-quarter 2025 earnings (excluding 9 cents per share) of $1.49, which beat the Zacks Consensus Estimate of $1.44 and improved 4.2% year over year. Revenues of $21.5 billion surpassed the Zacks Consensus Estimate of $21.1 billion but decreased 0.7% year over year.

GXO Logistics (GXO) reported solid first-quarter 2025 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Quarterly earnings of 29 cents per share beat the Zacks Consensus Estimate of 26 cents but declined year over year. Revenues of $2.97 billion outpaced the consensus mark of $2.91 billion as well as improved year over year.

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

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