TLDR
- FedEx reports Q4 earnings Tuesday with expected EPS of $5.87 on $21.8 billion revenue, down from earlier projections due to economic slowdown and tariffs
- Full-year fiscal 2025 sales expected at $87.4 billion, down from $87.7 billion in 2024 and well below 2022 peak of $93.5 billion
- Citi maintains Buy rating with $267 price target, citing low valuation at 11x earnings versus normal 14-15x multiple
- Company founder Fred Smith died Saturday at age 80, leaving behind legacy of overnight delivery innovation since 1973
- Stock down 11% over past year but up 1.9% Monday; options markets expect 7% move following earnings announcement
FedEx faces a crucial earnings test Tuesday evening as the shipping giant reports fourth-quarter results. The company expects to post earnings per share of $5.87 on revenue of $21.8 billion for the quarter ended in May.
These numbers represent a step down from earlier Wall Street expectations. Before the March third-quarter report, analysts were looking for $6.80 per share on $22.3 billion in sales.
The downgrades reflect broader economic headwinds hitting the shipping sector. New U.S. tariffs disrupted global trade patterns early in 2025, while a slowing economy dampened demand for freight services.
A year ago, FedEx delivered $5.41 per share on $22.1 billion in revenue. The modest year-over-year improvement masks deeper challenges facing the Memphis-based company.
Full-year fiscal 2025 sales are projected to reach $87.4 billion. That’s down from $87.7 billion in fiscal 2024 and well below the company’s 2022 peak of $93.5 billion during the post-Covid e-commerce boom.
Strategic Restructuring Underway
Wall Street expects fiscal 2026 guidance showing earnings per share of $19.70, up from $18 in fiscal 2024. Revenue growth of less than 2% to $89.5 billion would represent modest progress.
Citi analyst Ariel Rosa maintains a Buy rating with a $267 price target despite the challenging backdrop. She points to FedEx’s strategic restructuring efforts as reasons for optimism.
The company is executing its Network 2.0 plan, which integrates Express and Ground operations. This consolidation aims to streamline costs and improve efficiency across the delivery network.
FedEx is also preparing to spin off its Freight business. The move could unlock value by allowing each unit to focus on its specific market dynamics.
The DRIVE cost-cutting program continues delivering savings that should support margin improvement over time. These operational changes come as the company navigates uncertain demand conditions.
Founder’s Legacy Lives On
The earnings call scheduled for 5 p.m. Eastern will carry extra weight following founder Fred Smith’s death Saturday. Smith passed away from natural causes at age 80.
Smith’s overnight delivery concept began as a Yale paper in the 1960s that earned him a C grade. His professor called the idea unfeasible, but Smith pressed forward anyway.
He launched Federal Express in 1973 with 14 Dassault Falcon jets. Today’s FedEx operates nearly 700 aircraft and more than 175,000 motorized vehicles across a global network.
GE Aerospace CEO Larry Culp called Smith “a beloved customer” and “friend and inspiration.” Smith had reached out to Culp as recently as last week for business counsel.
FedEx stock trades at just 11 times estimated fiscal year earnings. A multiple of 14 to 15 times would look more normal based on recent trading patterns.
Options markets expect shares to move 7% in either direction following the earnings announcement. The stock has moved an average of 9% over the past four earnings reports, rising once and falling three times.
FedEx shares fell 11% over the past 12 months but gained 1.9% Monday. The S&P 500 and Dow Jones Industrial Average rose 0.8% and 0.7% respectively on Monday.
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