FedEx holds back on FY2026 outlook, prompting investor sell-off

FedEx remains focused on cost-cutting and shareholder returns, but its reluctance to provide guidance for FY2026 has heightened concerns over its outlook. This has unsettled investors, triggering a decline in FDX shares.

FedEx Corporation (NYSE: FDX) reported better-than-expected results for Q4 of the 2025 financial year. Adjusted earnings per share were 6.07 USD, with strict cost controls helping to offset stagnant revenue. The company achieved savings of 2.2 billion USD across FY25 under its DRIVE program and expects a further 1.0 billion USD in FY26, including approximately 200 million USD in Q1 FY26.

However, management declined to issue guidance for the full FY26, citing ongoing macroeconomic uncertainty, trade-related risks, and weaker freight volumes on the Asia–US route. A cautious Q1 FY26 forecast and modest revenue growth led to a 4% fall in FedEx shares on the first trading day after the results were released.

Despite current challenges, the results also contain positive signals, including resilient free cash flow, continued efforts to cut costs, and an increase in capital returns through dividends and share buybacks.

This article examines FedEx Corporation’s business model and revenue streams, reviews the company’s performance in Q2, Q3 and Q4 of FY2025, and outlines expectations for FY2026. It also includes a technical analysis of FDX and provides a FDX stock outlook for the 2025 calendar year.

About FedEx Corporation

FedEx Corporation is an American logistics company founded in 1971 by Frederick Smith. The company provides global express delivery, freight transportation, logistics, and e-commerce services. In 1978, it went public through an IPO on the NYSE, where its stock trades under the ticker FDX.

FedEx holds a leading position in the global logistics and delivery market, though its market share varies by region and delivery segment. Major competitors include Amazon Logistics, DHL, and United Parcel Service, Inc. (NYSE: UPS).

FedEx Corporation’s business model

FedEx’s business model is centred around providing logistics and transportation services, primarily express delivery and freight transportation. The company generates revenue from various business segments, each catering to different client categories: individuals, small and medium-sized enterprises, and large corporations. The main sources of the company’s income are as follows:

• FedEx Express: one of the key segments responsible for the fast delivery of parcels and documents worldwide. Revenue is generated through tariffs based on weight, distance, and delivery speed
• FedEx Ground: ground delivery of freight and parcels, which is typically slower but more cost-effective than air transportation. This segment is popular among small and medium-sized enterprises, as well as in the e-commerce sector
• FedEx Freight: this segment transports freight across the US and international routes, focusing on large and heavy cargo.
• FedEx Services: provides logistics and business solutions, including supply chain management, IT services, and e-commerce support for corporations
• FedEx Office: offers retail and business services, including document printing, mailbox rentals, and package handling and shipping at service points

The company reports on two segments – FedEx Express and FedEx Freight – with other divisions categorised under ‘Other Income’.

FedEx Corporation Q1 FY2025 report

On 19 September 2024, FedEx posted disappointing results for the Q1 fiscal year 2025, which ended on 31 August 2024. Below are the key figures compared to last year’s corresponding period:

• Revenue: 21.60 billion USD (-0.5%)
• Net income: 890 million USD (-26.0%)
• Earnings per share: 3.60 USD (-21.0%)
• Operating margin: 5.20% (-190 basis points)

Revenue by segment:

• FedEx Express: 18.30 billion USD (-1.0%)
• FedEx Freight: 2.32 billion USD (-2.0%)
• Other and eliminations: 945 million USD (+9.0%)

The fundamental analysis of FedEx’s report indicated stagnant revenue despite increased expenses. Transportation costs rose by 5% to 5.27 billion USD, and business optimisation costs increased by 22% to 128 million USD. As a result, net income declined from 1.16 billion to 0.89 billion USD. Analysts’ forecasts were not met: revenue was expected to be 360 million USD higher (21.96 billion USD), and earnings per share were projected at 4.86 USD, above the actual 3.60 USD. Following the report’s release, FedEx stock plunged by over 15%.

If the logistics company shows no revenue growth, this may indicate a slowdown in the US economy. Additional pressure came from a 0.50% Federal Reserve interest rate cut, which may suggest the peak of economic growth.

FedEx’s outlook for the fiscal year 2025 was cautious, with revenue expected to rise moderately and the EPS forecast lowered from 18.25-20.25 USD to 17.90-18.90 USD.

FedEx CEO Rajesh Subramaniam noted that the weak results were due to reduced demand for express deliveries, higher operating costs, and a downturn in industrial production. Despite cautious optimism about the second half of 2024, the company maintained a moderate outlook due to economic uncertainty.

FedEx Corporation Q2 FY2025 report

On 19 December 2024, FedEx posted disappointing results for the Q2 fiscal year 2025, discouraging investors again. Below are the main highlights:

• Revenue: 22.00 billion USD (-1.0%)
• Net income: 0.99 billion USD (-1.9%)
• Earnings per share: 4.05 USD (+1.5%)
• Operating margin: 5.60% (+10 basis points)

Revenue by segment:

• FedEx Express: 18.84 billion USD (+0.3%)
• FedEx Freight: 2.18 billion USD (-11.2%)
• Other and eliminations: 949 million USD (+0.9%)

FedEx’s management, commenting on the 1% revenue decline, attributed it to a challenging economic environment, particularly the weakness in the US industrial economy and the expiration of its air freight contract with the US Postal Service (USPS), which ended on 29 September 2024 and had previously generated approximately 2 billion USD in annual revenue. However, there were also positive developments, including a 9% increase in international export parcel volume and cost-saving benefits from the DRIVE program, which resulted in savings of 540 million USD in the last quarter.

The company also highlighted the completion of a one billion USD share buyback and announced plans to spin off FedEx Freight into a separate publicly traded company within the next 18 months to increase stockholder value.

For Q3 of the fiscal year 2025, management expects positive effects from increased DRIVE savings and higher revenue due to the Cyber Week event dedicated to cybersecurity, digital technology, and the IT industry. However, these benefits may be offset by the loss of the USPS contract.

The fiscal 2025 outlook expects revenue to remain approximately the same as last year. The EPS forecast has been adjusted to a range between 19.00 USD and 20.00 USD, down from 20.00 USD to 21.00 USD.

FedEx Corporation Q3 FY2025 report

On 20 March 2025, FedEx reported disappointing results for Q3 of the fiscal year 2025, discouraging investors again. Below are the key figures:

• Revenue: 22.20 billion USD (+0.9%)
• Net income: 1.09 billion USD (+12.3%)
• Earnings per share: 4.51 USD (+16.8%)
• Operating margin: 6.70% (+40 basis points)

Revenue by segment:

• FedEx Express: 19.81 billion USD (+2.7%)
• FedEx Freight: 2.08 billion USD (+27.2%)
• Other and eliminations: 890 million USD (+3.3%)

In his commentary on the report, Rajesh Subramaniam noted revenue growth in Q3 compared to the same period last year, marking the first such increase in fiscal year 2025. He stated that FedEx improved profitability despite a particularly challenging operating environment, which included a busy festive season and severe weather conditions. Management also emphasised the success of the DRIVE program, which helped save 600 million USD in costs during the quarter, contributing to a 12% rise in adjusted operating income, which increased to 1.8 billion USD from the previous year.

FedEx’s management expressed cautious optimism regarding its Q4 fiscal year 2025 outlook. The company is expected to continue pursuing its revenue quality strategy and to increase cost savings from the DRIVE program further. Specifically, it projects closing Q4 FY2025 with annual cost savings exceeding 2.2 billion USD, in line with its target for the full fiscal year 2025.

However, management also anticipates ongoing challenges in the FedEx Freight segment, though these are expected to ease somewhat compared to previous quarters. Revenue in the FedEx Express segment is forecast to remain nearly unchanged, while the FedEx Freight segment is expected to experience a decline in revenue compared to the prior year.

FedEx revised its full fiscal year 2025 forecast downward, now expecting EPS to range from 18.00 USD to 18.60 USD, down from 19.00-20.00 USD. This revision reflects ongoing economic challenges and uncertainty regarding global trade policies under the Donald Trump administration.

FedEx Corporation Q4 FY2025 earnings report

• Revenue: 22.21 billion USD (+1%)
• Net profit: 1.46 billion USD (+9%)
• Earnings per share (EPS): 6.07 USD (+12%)
• Operating margin: 8.4% (+150 basis points)

Revenue by Segment:

• FedEx Express: 18.98 billion USD (+1%)
• FedEx Freight: 2.30 billion USD (−4%)
• Other and eliminations: 946 million USD (+2%)

FedEx delivered a solid performance in Q4 FY2025, with adjusted EPS of 6.07 USD on revenue of 22.2 billion USD – both metrics exceeding expectations, despite only modest year-on-year revenue growth.

Instead of issuing full-year guidance, FedEx provided a limited outlook for Q1 FY2026, forecasting revenue growth between 0% and 2% and adjusted EPS in the range of 3.40 to 4.00 USD – a forecast that fell short of analyst expectations.

There are, however, encouraging signals. The company has already achieved 2.20 billion USD in cost savings through the DRIVE program and expects a further 1.00 billion USD in FY2026, supported by both DRIVE and the Network 2.0 initiative. According to CEO Raj Subramaniam, around 200 million USD of these savings will be realised in the first quarter, with the main impact expected mid-year.

FedEx also continues to return capital generously to shareholders. The annual dividend was increased by 5% to 5.80 USD, and 2.10 billion USD remains under its share buyback program. Cash flow remains strong, with a conversion rate of nearly 90% over the past year.

A potential weakness is management’s decision not to provide full-year guidance, which underlines the ongoing external uncertainty – particularly concerning trade tariffs between the US, China, and Europe. Additional pressure comes from reduced freight volumes from Asia to the US, the expiration of the USPS contract, and continued weakness in the B2B segment. However, FedEx is actively shifting its focus to higher-margin, oversized shipments. It has signed a new rural delivery agreement with Amazon, which may help offset some of the pressure on revenue.

The Q4 FY2025 report demonstrated the company’s resilience in an unstable global environment, with effective cost control adding to investor confidence. In addition, shareholders continue to receive generous payouts. However, the cautious outlook and global risks offer little room for short-term optimism.

For long-term investors, the key question remains whether FedEx can successfully translate its structural reforms and network improvements into profit growth by mid-FY2026. If so, the current share price may represent an attractive entry point.

Expert forecasts for FedEx Corporation stock

• Barchart: 19 out of 30 analysts rated FedEx stock a Strong Buy, one a Moderate Buy, eight Hold, and two Strong Sell. The highest target price is 354 USD, while the lowest is 200 USD
• MarketBeat: 19 of 30 analysts assigned a Buy rating to the shares, nine gave a Hold recommendation, and two advised Sell. The highest target price is 337 USD, with the lowest at 200 USD
• TipRanks: 17 of 21 surveyed analysts rated the stock Buy, three recommended Hold, and one Sell. The highest target price is 337 USD, while the lowest is 200 USD
• Stock Analysis: 10 out of 24 analysts gave the stock a Strong Buy rating, seven rated it Buy, five Hold, one Sell, and one Strong Sell. The highest target price is 335 USD, and the lowest is 200 USD.

FedEx Corporation stock price forecast for 2025

In May 2021, FedEx shares peaked at 297 USD before entering a downtrend that took the price as low as 140 USD. In 2024, the stock once again approached the 297 USD resistance level, testing it three times. However, all three attempts failed, and the share price reversed once more, falling to 200 USD. In addition, a Flag pattern has formed on the chart, which may indicate a continuation of the downtrend. Based on the recent FedEx stock performance, the possible scenarios for the price movements in the 2025 calendar year are as follows:

The FedEx base-case forecast assumes a breakdown below the lower boundary of the Flag pattern, followed by a further decline to the next support level at 150 USD. In this case, the total drop from the all-time high would reach 50%. A rebound from the 150 USD level would serve as a signal for a potential recovery, with a target zone near the 250 USD resistance level. The bearish scenario is supported by management’s decision not to provide full-year guidance for FY2026, as well as a weak Q1 outlook, which includes flat revenue expectations and a projected decline in earnings per share.

The bullish scenario for the FedEX stock outlook envisions a breakout above the 250 USD resistance. If this occurs, FDX could surpass its all-time high of 300 USD and target the 360 USD resistance line. A recovery in global freight demand, a strong Q1 FY2026 earnings report, and the return of full-year guidance from FedEx management would support this scenario.

Risks of investing in FedEx Corp stock

When investing in FedEx, it is essential to consider the risks the company may face. Below are the key factors that could negatively impact FedEx’s revenue:

• Economic sensitivity: FedEx’s financial performance is closely tied to the global economy. Economic downturns may lead to reduced demand for shipping services as businesses and consumers cut back on spending
• Intense competition: the logistics sector is highly competitive. FedEx faces significant pressure from major players such as UPS (NYSE: UPS) and DHL, as well as emerging competitors like Amazon (NASDAQ: AMZN), which is developing its own logistics network
• Fuel price volatility: as a logistics company, FedEx is heavily dependent on fuel prices. While fuel surcharges help offset costs, continuous price increases can raise shipment costs and lead to customer dissatisfaction due to higher tariffs, ultimately impacting revenue
• Dependence on the US market: a substantial portion of FedEx’s revenue is derived from the US. Economic challenges or market saturation within the US may limit growth opportunities and reduce overall revenue