economy
Why FedEx is down after a strong quarter
We knew this report would be transitional, even messy, given the separation of FedEx Freight.
TL;DR
- FedEx reported Q4 2026 revenue of $25 billion, exceeding consensus forecasts.
- Earnings per share (EPS) increased to $6.31, also beating expectations.
- Shares fell in after-hours trading due to a slight operating margin miss (8.35% vs. 8.44% estimate) and conservative forward earnings guidance.
- Fuel surcharges increase revenue but squeeze margins without significantly affecting earnings.
- FedEx is seeing no drop in demand due to fuel surcharges.
- CEO Raj Subramaniam is historically conservative with earnings guidance, especially post-FedEx Freight spin-off.
- The company announced a $1 billion stock buyback.
- FedEx is focusing on parcel and logistics services, emphasizing higher-margin end markets.
- Growth is expected from new initiatives like FedEx Life Science and the AI/data center space.
- Management forecasts full-year earnings between $16.90 and $18.10 per share, with 11% revenue growth.
- The article maintains a '1' rating and a $380 price target for FedEx.