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1. Company Snapshot

1.a. Company Description

FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally.The company's FedEx Express segment offers express transportation, small-package ground delivery, and freight transportation services; time-critical transportation services; and cross-border enablement, technology, and e-commerce transportation solutions.Its FedEx Ground segment provides day-certain delivery services to businesses and residences.


The company's FedEx Freight segment offers less-than-truckload freight transportation services.As of May 31, 2022, this segment had approximately 30,000 vehicles and 400 service centers.Its FedEx Services segment provides sales, marketing, information technology, communications, customer service, technical support, billing and collection, and back-office support services.


The company's Corporate, Other and Eliminations segment offers integrated supply chain management solutions, specialty transportation, customs brokerage, and global ocean and air freight forwarding services; and document and business services, as well as retail access to its customers for its package transportation businesses.FedEx Corporation was founded in 1971 and is based in Memphis, Tennessee.

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1.b. Last Insights on FDX

FedEx's recent performance was driven by strong Q2 earnings and revenue beats, with high single-digit revenue growth driven by yield and volume strength across US domestic package services. The company's strategic shift toward premium B2B verticals and robust cost reduction programs support its revenue and margin outlook. Analysts have increased their forecasts, with Raymond James Financial raising its price target to $305.00. Additionally, FedEx's structural cost cuts and easing macro conditions are expected to support EPS growth. A 30% price target boost by a Wall Street analyst has also caught investors' attention.

1.c. Company Highlights

2. FedEx Delivers Strong Q2 FY '26 Earnings

FedEx Corporation reported robust second-quarter fiscal 2026 earnings, with revenue increasing 7% year over year, driven by yield and volume strength across US domestic package services. Adjusted operating income grew 17%, and adjusted EPS was $4.82, up 19% year over year, surpassing analyst estimates of $4.12. The company's transformation efforts and structural cost reductions led to significant improvements in profitability.

Publication Date: Dec -20

📋 Highlights
  • Revenue Growth:: Q2 revenue rose 7% YoY, driven by US domestic package services with strong yield and volume growth.
  • Adjusted EPS Surge:: Adjusted EPS reached $4.82, up 19% YoY, with full-year guidance raised to $17.80–$19.00.
  • Freight Segment Struggles:: FedEx Freight’s adjusted operating income fell $70M, and margin dropped 3 pts, though yields turned positive.
  • Network 2.0 Progress:: Automated facilities now handle 24% of volume, targeting 65% by next peak season, driving $2B in cost savings by 2027.
  • Capital Allocation:: $300M stock repurchase in Q2, with $1.3B remaining, and $1.4B CapEx on track for $4.5B annual investment in FY26.

Segment Performance

FedEx Freight's results were pressured due to lower volumes, with adjusted operating income declining by $70 million and adjusted operating margin contracting by three percentage points. However, the team is positioned well for the eventual recovery, with yields turning positive in Q2, demonstrating the division's disciplined strategy.

Outlook and Guidance

The company raised its adjusted EPS outlook to $17.80 to $19.00 and expects 5% to 6% consolidated revenue growth for fiscal year 2026, supported by sustained US domestic yield and volume growth. FedEx now expects to deliver adjusted EPS of $17.8 to $19, reflecting a range of potential scenarios for the back half of the year.

Operational Highlights

FedEx is seeing benefits from its Network 2.0, with 24% of volume flowing through automated facilities. The company targets 65% of volume to be processed through these facilities by next peak season and a 30% footprint reduction by the end of fiscal year 2027, leading to $2 billion in cost savings.

Valuation and Metrics

With a P/E Ratio of 16.18 and EV/EBITDA of 8.18, FedEx's valuation appears reasonable, considering its growth prospects and profitability improvements. The company's ROE of 21.01% and Free Cash Flow Yield of 6.38% are also attractive. Analysts estimate next year's revenue growth at 4.8%, indicating a stable outlook.

Strategic Initiatives

FedEx is scaling AI adoption across the organization to drive innovation and efficiency. The company is also preparing for the spin-off of FedEx Freight, which is on track for June 1, 2026, and has submitted a confidential Form 10 to the SEC.

Challenges and Risks

Despite the positive outlook, FedEx faces headwinds from variable incentive compensation accruals, sustained weak LTL industry trends, and MD-11 groundings. The company expects a $1 billion headwind estimate for FY '26, which does not assume any changes in trade patterns.

3. NewsRoom

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FedEx (NYSE:FDX) Stock Acquired Rep. Gilbert Ray Cisneros, Jr.

Feb -22

Source: defenseworld.net

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FedEx (FDX) Exceeds Market Returns: Some Facts to Consider

Feb -20

Source:

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Beyond the Box: How FedEx Is Winning as Tech Slumps

Feb -20

Source: marketbeat.com

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Alberta Investment Management Corp Has $590,000 Position in FedEx Corporation $FDX

Feb -20

Source: defenseworld.net

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FedEx Corporation (NYSE:FDX) Receives Consensus Rating of “Moderate Buy” from Brokerages

Feb -19

Source: defenseworld.net

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Is FedEx (FDX) Stock Outpacing Its Transportation Peers This Year?

Feb -18

Source: zacks.com

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FedEx Corporation (FDX) Analyst/Investor Day Transcript

Feb -17

Source: seekingalpha.com

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Aberdeen Group plc Decreases Position in FedEx Corporation $FDX

Feb -17

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.28%)

6. Segments

FedEx Express (Including TNT Express)

Expected Growth: 8.3%

Fast and secure delivery of high-value and time-sensitive shipments drives growth, fueled by increasing demand for express logistics, particularly in e-commerce and the need for reliable international shipping solutions.

Fedex Ground

Expected Growth: 4.5%

FedEx Corporation's growth is driven by increasing e-commerce demand, expansion in emerging markets, and strategic investments in digital transformation and logistics infrastructure.

FedEx Freight

Expected Growth: 4.5%

FedEx Freight's growth is driven by increasing e-commerce demand, expansion of its freight forwarding services, and strategic pricing strategies to maintain market share in the competitive LTL carrier market.

Corporate, Other, and Eliminations

Expected Growth: 4.5%

FedEx's consolidated corporate overhead, other revenue and eliminations segment is driven by growth in e-commerce, increasing demand for logistics services, and strategic cost management initiatives.

FedEx Services

Expected Growth: 8.2%

FedEx's logistics, and transportation services will drive growth, fueled by increasing global trade, demand for e-commerce, strategic acquisitions, and investments in digitalization and infrastructure.

7. Detailed Products

FedEx Express

Time-sensitive, door-to-door delivery of packages and freight, with a focus on speed and reliability.

FedEx Ground

Cost-effective, day-definite delivery of packages and freight, with a focus on reliability and efficiency.

FedEx Freight

Less-than-truckload (LTL) and truckload (TL) freight services for large shipments, with a focus on reliability and flexibility.

FedEx Office

Retail and printing services, including copying, printing, and shipping, with a focus on convenience and flexibility.

FedEx Supply Chain

Customized logistics and supply chain management services, with a focus on efficiency and visibility.

FedEx Trade Networks

International air and ocean freight forwarding services, with a focus on customs clearance and compliance.

FedEx Services

Customized logistics and transportation services, including warehousing and distribution, with a focus on flexibility and scalability.

8. FedEx Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

FedEx has a moderate threat of substitutes due to the presence of alternative logistics and transportation companies, but its strong brand reputation and extensive network mitigate this threat.

Bargaining Power Of Customers

FedEx has a low bargaining power of customers due to its large customer base and diversified revenue streams, making it less dependent on individual customers.

Bargaining Power Of Suppliers

FedEx has a moderate bargaining power of suppliers due to its dependence on fuel suppliers and aircraft manufacturers, but its large scale of operations and long-term contracts mitigate this threat.

Threat Of New Entrants

FedEx has a low threat of new entrants due to the high barriers to entry in the logistics and transportation industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

FedEx operates in a highly competitive industry with intense rivalry among established players, including UPS, DHL, and Amazon, which drives innovation and cost-cutting efforts.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.50%
Debt Cost 3.95%
Equity Weight 40.50%
Equity Cost 10.13%
WACC 6.45%
Leverage 146.93%

11. Quality Control: FedEx Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
TransDigm Group

A-Score: 7.0/10

Value: 3.0

Growth: 8.0

Quality: 6.7

Yield: 9.0

Momentum: 7.0

Volatility: 8.3

1-Year Total Return ->

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PACCAR

A-Score: 6.0/10

Value: 4.1

Growth: 6.7

Quality: 5.0

Yield: 8.0

Momentum: 4.0

Volatility: 8.3

1-Year Total Return ->

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Paychex

A-Score: 6.0/10

Value: 2.1

Growth: 5.8

Quality: 9.0

Yield: 7.0

Momentum: 2.5

Volatility: 9.3

1-Year Total Return ->

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Caterpillar

A-Score: 5.7/10

Value: 2.0

Growth: 6.9

Quality: 6.2

Yield: 3.0

Momentum: 8.5

Volatility: 7.3

1-Year Total Return ->

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UPS

A-Score: 5.4/10

Value: 4.9

Growth: 4.2

Quality: 4.9

Yield: 9.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
FedEx

A-Score: 5.3/10

Value: 5.6

Growth: 5.6

Quality: 4.1

Yield: 4.0

Momentum: 5.0

Volatility: 7.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

389.13$

Current Price

389.13$

Potential

-0.00%

Expected Cash-Flows