FedEx (FDX) Q4: Cost-Cut Miracle Boosts Margins—But Why Are Investors Running Scared?
FedEx just pulled off a margin magic trick—slashing costs like a Black Friday shopper. But Wall Street isn’t applauding. Here’s why the logistics giant’s outlook has shares sweating bullets.
The Good: Scalpel Work Pays Off
Operational liposuction delivered fatter margins, proving even dinosaurs can learn new tricks. Efficiency gains? Check. Belt-tightening? Double-check. Now if only revenue would stop playing hide-and-seek.
The Bad: Guidance Ghosts the Party
Management’s crystal ball showed murky skies ahead—triggering the classic ‘sell first, ask later’ reflex. Because nothing terrifies traders more than a company that won’t pinky-swear on growth.
The Ugly: Street vs. Suite
Analysts wanted confetti and champagne. They got cautious optimism and spreadsheet poetry. Cue the institutional tantrum—because apparently, adulthood is optional when quarterly guidance misses the memo.
Bottom line: FedEx mastered the cost-cut cha-cha, but the market’s dancing to a different tune—one that sounds suspiciously like ‘show me the money.’ *Cue finance bros hyperventilating into their Bloomberg terminals.*
TLDR
- FedEx stock closed at $229.51 but dropped over 5% pre-market on lower-than-expected Q1 2026 EPS guidance.
- Q4 2025 revenue reached $22.22 billion, topping estimates; adjusted EPS came in at $6.07.
- FedEx achieved $4 billion in cost savings under its DRIVE program and plans another $1 billion cut in FY26.
- U.S. home delivery volume jumped 10% YoY, but global trade issues, especially with China, pressured export business.
- Capital spending hit a decade low at $4.1 billion in FY25; dividend set to rise 5% in FY26.
FedEx Corporation (NYSE: FDX) reported fiscal Q4 2025 earnings on June 24, beating analyst estimates on both revenue and profit. The stock, which closed at $229.51, fell over 5% in pre-market trading after the company issued modest guidance for the first quarter of fiscal 2026.
FedEx Corporation (FDX)
Revenue for the quarter came in at $22.22 billion, surpassing consensus estimates of $21.79 billion. Adjusted earnings per share (EPS) reached $6.07, well ahead of the $5.84 analysts expected. Net income for the period totaled $1.65 billion, or $6.88 per diluted share, versus $5.94 a year earlier.
$FDX Earnings:
– Revenue: $22.2 billion
– Diluted EPS: $6.88
– Adjusted Diluted EPS: $6.07
“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… pic.twitter.com/bSMtUzTQEO
— AlphaSense (@AlphaSenseInc) June 24, 2025
Transformation Plan Yields Major Savings
FedEx concluded fiscal 2025 with significant operational milestones. The DRIVE cost-saving initiative hit its $4 billion cumulative target, achieved over two years. Management now expects to cut an additional $1 billion in fiscal 2026 through continued transformation and optimization.
The firm also returned $4.3 billion to shareholders through dividends and repurchases, with $3 billion of that allocated to buybacks. CapEx spending fell to $4.1 billion—its lowest in over a decade—accounting for just 4.7% of revenue.
Mixed Performance Across Units and Geographies
While U.S. ground home delivery volume ROSE 10% and daily package volume increased 6% year over year, international results faced headwinds. International export package yield declined 1%, and FedEx Freight’s operating income was impacted by a sluggish industrial economy.
Asia-to-America shipments were down sharply due to escalating trade tensions, particularly with China. These global dynamics, alongside the expiration of a key U.S. Postal Service contract, weighed on performance.
Outlook Signals Near-Term Caution
For fiscal Q1 2026, FedEx expects flat to 2% revenue growth year over year and adjusted EPS between $3.40 and $4.00—below Wall Street’s $4.06 target. The company cited a $170 million export revenue headwind, mostly from reduced Chinese shipments due to tax policy changes.
Capital spending for FY26 is projected at $4.5 billion, with a focus on modernizing fleets and automating facilities. Pension contributions are expected to decline to $600 million.
Strategic Shift and Leadership Transition
FedEx is preparing to spin off its Freight division, targeting completion within 18 months. The announcement followed the recent passing of founder Fred Smith, who had stepped down as CEO in 2022.
Despite near-term challenges, the company remains committed to long-term shareholder value creation through ongoing network integration and disciplined cost management.